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Investor funds heed rising ethical tide

The growing practice of investing with the intention of generating social or environmental benefits, known as impact investing, has prompted fund managers to assess their offering.

Impact investment platform Emerald Wrap director Matthew Dent says the growth of ethical investment shows today’s investors are looking for more than just returns.

“The days of the two-dimensional approach of risk and reward to investment is being replaced by a far more sophisticated four-dimensional framework that adds ‘impact’ and ‘alignment’ to the equation,” Mr Dent said.

This trend among investors is driving the changing face of investment offerings and funds.

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“As companies respond to the demands imposed by government, media and environmental and social pressure groups to address environmental, social and governance (ESG) issues, so too are fund managers having to structure their portfolios with this critical factor top of mind,” Mr Dent said.

“The days when ESG/impact issues only received lip service are fast disappearing, with more and more investors – institutional and retail – demanding that their investments reflect socially and environmentally sound principles.”

The market seems to agree. Last year, Emerald Wrap was acquired by product provider Instreet Investment and later partnered with another impact investment fund manager.

Instreet Investment director George Lucas said the move to acquire an impact investment platform was a natural one given the growth in the industry.

“We believe the days of one generic fund or answer for customers is over, with new platform technologies allowing customers to tailor their own solutions,” Mr Lucas said.

He said this investment is helping drive new growth as investors look for returns, especially in ethical technologies.

“We look at all of the upcoming sectors, clean technology, renewables, 4D printing, water, health, divestment and equality, to name a few, where investors can dovetail their risk/reward goals while meeting their ESG concerns.”

Investor funds heed rising ethical tide
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