We live in a world with many existential challenges – from climate change to social unrest to income inequality. And while all of this might seem reason for despair, there is also great reason for hope that change is possible: the demand for impact investing is growing.
Impact investing, by definition, is an investment strategy that looks to generate specific – and positive – social or environmental effects, in addition to financial gains. These can be investments in a variety of asset classes – from stocks to bonds, and can take place in both the private and public markets.
But the end goal is the same: Putting investor money and capital to work to build a better world.
Why Now is the Right Time for Impact Investing
In light of all the challenges we face, investors interested in sustainable investing have an opportunity to consider the full impact of their portfolio – and to invest their wealth in ways that support positive changes. “Whether it’s climate, income inequality or other social issues, it’s critical we direct capital to companies offering solutions for these problems,” says Stephanie Tsui, Genus Portfolio Manager and Head of Foundations & Non-Profits. “From a climate perspective, we might be late, but better late than never.”
Recently, Tsui hosted a webinar  that took an in-depth look at some of the impact investments we hold in our funds and through our Impact Investment Counsel (a fully managed, customized impact portfolio management service). At Genus, impact investing runs the gamut from liquid impact investments in public companies to illiquid impact (private equity), venture impact and philanthropic impact investments; the last three categories are higher risk, and thus available only to accredited investors.
With the planet and our oceans growing warmer with each passing year – and Covid-19 exacerbating longstanding issues such as gender and income inequality – now is the perfect time for investors of all stripes to consider deploying resources to impact investing.
At Genus, we measure impact investments based on the percentage of revenues being generated from a company’s products or services that contribute to global sustainable development goals (SDGs), defined by the UN’s 2030 Agenda for Sustainable Development.
These 17 SDGs cover everything from clean water and sanitation to zero hunger and gender equality. We carefully vet the companies and funds in our portfolios – ensuring that they address the SDGs while also delivering appropriate financial returns.
How Impact Investing is Changing Our World
One standout example of an impact company in our portfolio is Enphase Energy, a publicly traded technology firm that develops and manufactures solar micro-inverters, battery energy storage and EV charging stations. Investor capital is contributing to its ability to develop solutions to the climate challenge: as of October 2022, Enphase had installed more than 2.7 million systems in more than 145 countries and diverted 31 million metric tonnes of CO2 from entering the atmosphere — enough to power almost four million homes for one year.
That said, much of impact investing happens at a smaller scale — and at the intersection of several social and environmental factors. You can’t consider the plight of our climate, for instance, without also considering the plight of women, racialized populations and the economically insecure. That is the perspective of Alexa Blain, co-founder and managing partner of Deetken Impact, a Vancouver-based impact investing firm operating in Latin America and the Caribbean.
Blain, along with her colleague, Rachel Murphy – Deetken’s gender and sustainability officer – joined our recent webinar to explain how Deetken’s investment products (focused on sustainable energy and alternative financing projects) are having a tangible impact across the Global South.
“We’re always looking for investments that are going to generate an appropriate financial return for the risk that we’re taking,” says Blain. “But we direct our capital toward companies that are generating social and environmental benefits as core to their business model. We also aim to amplify the impact of those companies by engaging directly with them.” She notes how Deetken has employees on the ground in the 17 countries in which it operates — helping portfolio companies raise capital, providing them with technical assistance and disseminating expertise.
Murphy, based in Guatemala, is one of those on-the-ground experts. She leads Deetken’s Ilu Women’s Empowerment Program – a portfolio of impact funds with a gender-lens focus. “The data on the benefits of how gender diversity improves financial performance is clear,” says Murphy. “So we have a financial interest in advancing a company’s gender business practices to reduce the risks posed by not having diversity within their team.”
In just three years, the Ilu Women’s Empowerment Fund has supported 25 companies in the region and helped nearly 600,000 women to receive alternative financing. And, because of its work, almost 63,000 tons of CO2 has been displaced from the atmosphere.
For many — including Alexa Blain —the ultimate sign of success for impact investing is that it makes itself redundant as it becomes ingrained in our world. “I think we all hope that, 10 years from now, there won’t be impact investing,” says Blain. “There won’t be gender-lens investing, because it will all be fully integrated – much like responsible investing is, where 90% of assets managed today have some kind of ESG overlay. In 2023, impact investing is just smart investing.”
Genus is a proud partner of Deetken Impact and their Ilu Women’s Empowerment Fund is included in our Impact Investment Counsel offering.
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