After reading this website, we hope you feel compelled to start your own journey into impact investing and taking a Total Portfolio Management Approach (which would be great news!). Here are some practical tips based on our learnings and journey to help you along:
Think with your heart!
At RS Group, we believe investing is not a limited act, but that business activities and our economic future are inextricably linked to the well-being of society as a whole.
Take your time!
Take enough time at the beginning to network with other family offices and foundations that already have experience with aligning their investments with their mission (e.g., by visiting relevant conferences). These contacts can help you identify specialist investment advisors to assist you in building the impact portfolio (if not enough expertise is available in-house).
Make more friends!
The field of impact investing and strategic philanthropy is constantly evolving, so net-working with like-minded investors to stay abreast of new developments is important both for the build-up and for the maintenance of your portfolio. Reserve enough time for this networking and monitoring work.
Be flexible in your strategies!
If you already have a foundation or have a philanthropy portfolio, assess how the objectives of that portfolio can also be achieved through investments. There will be instances where grants can help achieve some of the objectives faster and more efficiently than pure capital investments, but there are other times when investments can be more impactful. Creating synergies and shared learnings between the two will drive even more impact.
The core-satellite approach
Use a “core-satellite” structure for the investment portfolio. Specify risk / return levels and impact contributions that can vary substantially for different parts of the portfolio.
Know your options!
The use of sustainable and socially responsible funds allows you to invest a large part of the portfolio in liquid strategies with risk / return characteristics comparable to traditional investments. A large range of funds is available including low-cost index trackers and funds contributing to climate change mitigation.
Know your managers!
Choose investment managers that are committed to sustainable investments and that actively vote proxies and engage with companies on sustainability issues. The exact social impact of these investments is usually not measurable, but their contribution to moving the economy on to a more sustainable path is nevertheless crucial.
Some risks are worth it!
Some risks are worth it! — Don’t shy from taking risks in the targeted impact (TI) part of the portfolio if these risks are compensated by substantial positive impact contributions. Diversification (e.g., across countries and counterparties in the context of a fund), is a good way to manage these risks. Providing seed capital to new funds and less established non- profits, with no or little track record (something larger institutional investors or large donors tend to shy away from), is an important way in which family offices and foundations can contribute to growing the field and leveraging their impact.
Be realistic when considering direct deals, especially at the beginning. The skills, time and resources required to manage them are usually far greater
than you think. An interesting option is to invest in funds that allow you to co-invest directly in single deals — this substantially reduces your due diligence and monitoring work.
See it all through your “values-based” lens
Include impact considerations in your Total Portfolio Policy Statement, specifying targets for both financial and social / environmental performance. Take into account sustaina- bility considerations when defining your strategic asset allocation (e.g., how certain speculative asset classes can impact financial market stability, how environmental and social trends will affect the prospects of whole sectors and regions, and how certain asset classes better align with your impact goals).
Work more closely with your managers!
Demand from all your investment managers that they regularly report on their strategies’ contribution to the social / environmental impact based on generally accepted standards such as IRIS and GIIRS.
Look for synergies
Regularly evaluate the dynamic between your philan- thropic efforts and your investments; there are often synergies which can be leveraged, even if it is just sharing information.
Spread the good news!
You can substantially leverage your positive impact
by sharing your experiences (e.g., by producing your own portfolio report), and motivating others to better align their investments with their mission.