Investors motivated to increase their impact investing
US President Donald Trump is seemingly indirectly encouraging some investors to focus more on impact investments and SRI in the US.
Robert Johnson, president and CEO of the American College of Financial Services, a nonprofit private educational institution, forecasts the election of Trump to be a ‘boon for impact and socially responsible investing.’
He says: ‘Trump is a polarizing political figure and the nation is politically divided. People who are concerned about the direction of the country feel they need to take action. Many people are awakening politically and feel the need to do what they can to change the direction of the country.’
‘We are already seeing anecdotal signs that private sector investors will be motivated to increase their impact investing,’ says Daniel Kern, chief investment officer of investment management firm TFC Financial Management in Boston.
SRI assets, which include assets tied to an impact mandate, hit $8.7 tn in 2016, up more than 183 percent since 2010, according to the Forum for Sustainable and Responsible Investment, the Washington, DC-based association of SRI professionals.
While investors pulled $127 bn from open-ended, actively managed stock funds last year, they added $3 bn to funds with some type of sustainable, responsible or impact mandate, according to Morningstar.
This is, however, part of a wider trend, according to Wei Trieu, senior vice president and partner at California-based Bellwether Capital Management. ‘SRI has morphed into impact investing,’ he says. ‘It has gone from, I don’t want to spend money on oil stocks and cigarette makers to I want to change the world and put money into those companies that are making a difference.’
The hope of impact investors is that their investment principles become the norm throughout the US investment community. ‘If you look at what has been happening in Northern Europe, where impact investment is more mainstream, you’ll see there is social pressure on companies to work and behave in a certain way,’ says Jeb Doggett, a director with Casey Quirk, in a story published by InvestmentNews.
