This article is written by Lyn Tomlinson, Head of Impact, at Cazenove Capital, which is our partner on Miolo Adviser, our private client engagement platform. Miolo advances the model for the acquisition and management of advisers across wealth management, using technology to personalise matching professional advisers based on suitability in addition to expertise.

 

We have just 81 months to halve global emissions if we are to avoid the worst impacts of climate change, according to the Intergovernmental Panel for Climate change. In light of that overwhelming challenge, what can we do?

We are all agents for change and, thankfully, there’s plenty we can do.

There has been a seismic shift in how philanthropists, high-net-worth individuals, family offices and charities alike, think about deploying their invested capital in recent years.

In a recent survey, 42% of our clients told us they not only wanted to avoid the negative impacts that their investments could have, but they also wanted their investments to have a positive impact. A further 10% said they would be prepared to give up financial returns in pursuit of that positive impact. These results are also seen across the broader market with many recent global surveys of wealthy individuals surfacing just how high their ambitions are.

Despite these positive intentions, only 2% of funds invested in bonds and equity markets are invested to have a positive impact. I believe that investors lack reliable advice in this area, which is contributing to this dislocation between ambition and capital flows.

As Dr Beth Breeze and Emma Beeston explain in their recently published book, Advising Philanthropists, the role of advisers is “to guide, to enlighten, to help, to encourage”. The opposite of advice can also be “to misinform, to discourage, or to be a hindrance”. Many of the barriers to sustainable and impact investing can be overcome with advice. This presents a huge opportunity and a moral imperative for those that advise the wealthy.

At Cazenove Capital, we have seen the power of advice: 42% of our clients say they want to invest sustainably but only 15% currently are. However, by working with clients to help them align their investments with their values, we have moved an additional £3.5 billion of assets to be invested in a way that meets our clients’ preferences in just the last three years.

We ask all of our clients about their sustainability and impact priorities. We also make sure that all of our advisers have the confidence, knowledge and understanding to have meaningful conversations with their clients about sustainability, impact investing and philanthropy.

We continue to develop investment solutions that suit clients’ needs, which in turn supports the movement toward investing to make a positive impact.

How can I support impact investing?

There are roles that everyone can play, from asset owners to asset managers. We recommend that asset owners speak out. Ask your fund managers, lawyers, investment consultants, trustees, family office and any of your trusted advisers how you can invest for impact.  We need you to create the demand.

Asset managers can develop products that can help clients to align investments with their values, whether they are private clients, pension schemes, charities or the man and woman on the street.

Wealth managers can guide, help, enlighten, and encourage.

A joint effort from all parties can create really ground-breaking results.

Schroders partnered with Big Society Capital to create the UK’s first impact investment trust. The fund has raised £85 million of capital to help to fund 160 social sector organisations. Each of these are dedicated to improving the lives of over 100,000 people living in the most deprived areas of the UK.

This trust only exists because of our purpose-led client base, who created the demand, an asset manager who created the solution and a wealth manager who gives advice.

Our clients also provided capital to important environmental technologies such as battery storage, and the building out of renewable energy in India through other investment trusts. This is another example of how working together, we are scaling sustainable and impact investing to help improve people’s lives and avoid the worst effects of climate change.

We do this too in philanthropy, through our Donor Advised Fund (DAF).  In the first year of launch, our clients donated around £43 million to the fund and have granted £9 million to over 100 charities, focusing on three key areas: the environment, poverty relief and education.

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This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.