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Impact investing: three ways to make a difference for community and climate

Impact investing: three ways to make a difference for community and climate.
Thomas Holloway headshot
Thomas Holloway
Portfolio Manager
The way we spend our money certainly determines our community and climate footprint. Many of us are keenly aware of it. The big and little things we buy add up, like how we commute (well, when commuting was a thing), where we travel, and remembering to bring reusable bags into the grocery store (and a mask!). A newer focus for mindful citizens is how to invest our financial assets also to have a positive impact. Three ways investors can do this are in public markets, private investments, and banking. I will give specific examples of all three.

1. Public Markets. Case study: Genus Fossil Free

Outside of their primary residence, most people invest primarily in stocks and bonds on the global capital markets, usually with the help of a professional investment manager like Genus Fossil Free (where I work). Investors do not need to sell everything and start an organic farm to align their portfolio with impact. Genus scores thousands of public companies on their climate and community impact then removes companies in the oil and gas business as well as those in weapons, tobacco and other unappealing industries. 

Within neutral industries, Genus picks specific companies that are doing a better job and overweights firms in positively green industries. In parallel, Genus scores all the stocks and bonds on the attractiveness of their expected return and then thoughtfully builds client portfolios to manage risk and diversification.

An investment of this type is suitable for up to 100% of investable assets. I am investing my whole RRSP.

2. Private Investments. Case study: ecologyst (formerly Sitka)

The vast majority of businesses are small- and medium-sized, unlisted on public exchanges. The investment value of these countless companies adds up to less than the big ones that everyone has heard of, but they are our engine of employment and community. Investor interest in unlisted companies has grown significantly lately with high-profile companies such as Uber and Airbnb staying private for much longer than previously. Some private businesses are brimming with purpose and a good way to know about it is to be a customer or employee. 

Putting the private-investing trend and impact-investing trend together leaves us looking for chances to buy into to smaller unlisted companies making a difference. The mission for Victoria-based outdoor clothing and lifestyle brand ecologist is to “leave it better than we found it”. The surf-inspired firm onshored all its clothing manufacturing to Victoria- British Columbia and pivoted to sustainable materials like organic cotton and wool. This sounds more like a green consumption choice than an investment – turns out it is both. Investors can directly buy ecologyst equity because the company is raising funds to expand their factory, accelerate online growth, and develop products. This investment is illiquid and will only see a return when the company is acquired or does an IPO.

A single investment of this type is suitable for up to 1% of investable assets, unless you work at the company when it can make sense to be more concentrated. I am investing less than ½%.

3. Banking. Case study: Vancity Community Investment Bank Impact GIC

Depending on time horizon, risk tolerance, and goals, a safer cash-like investment can make the most sense. Guaranteed Investment Certificates (GICs) are a deposit at a bank that earns a fixed rate of interest. Even if the bank fails, which does not happen very often (!), the Canadian Deposit Insurance Corporation (CDIC) insures the deposit up to $100k. GICs come in cashable or fixed-term varieties and current rates are in ballpark of 1-2% per year. That is not a lot of financial return, but you get security, liquidity, and with impact GICs, you get impact too. 

Vancity Community Investment Bank is a federally chartered bank tied to Vancity credit union. The funds raised by selling impact GICs are in turn lent to projects such as a land trust, community coworking hub, and affordable housing. The projects have to pay back the loans with interest, so it is not charity. The bank and the GIC investors expect to make a financial return. Green and impact lending is a significant growing trend globally. Expanded access to debt capital, perhaps at more affordable rates or better terms, will accelerate green and socially positive projects. That is making a difference even with a boring GIC.

A single investment of this type is suitable for up to $100k due to the federal guarantee. I am not investing personally, however I recommended and invested $100k for a non-profit board that I serve.

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Client impact

“Graduating from a big bank to Genus was one of the best financial steps we've ever taken. Genus has delivered reliable asset growth despite our moderate risk tolerance. As our financial security has grown, we've also been the beneficiaries of a great client experience. The company's communications have been consistently transparent and informative, including educational webinars and a well-designed web portal where we can track investments daily. Most importantly to us, our portfolio manager has always responded swiftly and thoroughly to our questions and requests. ”
Martin T.
"Having relatively diverse financial goals and needs, along with a slight reticence regarding the stock market, Genus skillfully addressed all of our concerns, and put together a truly exceptional plan: Fossil free funds and a diversified investment portfolio, check; An effective Impact investment portfolio that coincides with our hopes and dreams for a better world, check; Professional advice and assistance to create a donor advised charitable fund with immediate charitable receipts for tax purposes, check. Returns? Way beyond our expectations! We even had some fun along the way and certainly enjoyed an incredible two-year start to what will be a satisfying long-term relationship with Genus."
Marc B.
“I love the service I get at Genus.”
Chris H.
“Leslie and I were fellow board members when we met twenty years ago. For the last ten she has been thoughtful in the construction of an investment strategy for my family and is executing the strategy as planned. The team at Genus has met my expectations and are a pleasure to deal with.”
Bob Q.
“For over 15 years, I have provided selection and performance evaluation of multiple investment managers for a significant family office. Leslie and Genus have been foundational for me in my role. I have always found Leslie and her colleagues to be insightful and proactive, and found the performance of their portion of the portfolio to be well above benchmarks. And they have been a great pleasure to work with.”
Douglas H.
“Genus is a very innovative firm. I am pleased to invest in their Fossil Free and Impact strategies that help me invest in line with my values.”
Marnie C.
“Great team of professionals. Excellent website and reporting. Responds to inquiries promptly. Very pleased with the process of changing from another company to Genus as well. Kudos.”
David L.
“Genus consistently provides a good, clearly explained, comprehensive picture of the general economic and financial situation, along with an excellent account of the investment decisions made in relation to this. Genus’ equally strong concern with clients’ questions and requests for further information is also a very important part of the service it provides.”
Allan S.
“Back in 1992 when I found myself at fifty with a substantial amount of money to invest, I knew just one thing — that I didn’t want to contribute to tobacco companies, arms manufacturers, or oil. But over the ensuing years the options for socially responsible investing have become far more sophisticated and I’m very happy that this is a big part of the Genus approach. I also very much appreciate the long-term relationship with my portfolio manager, Mary Lou.”
Ann P.

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