We created CommonGood to be a resource for RIAs in the impact investing space. As you follow the financial industry, you hear a lot of lingo. You see impact, you see SRI, you see ESG. Most of you hear talk about values integration, and client demand, and about the biggest names in finance creating multibillion dollar impact funds. And while we are happy to talk about the industry and provide education surrounding these topics, we really created CommonGood to help RIAs navigate past the chatter and be a practical, actionable resource for advisors. Right here, right now: What is impact investing and how do you integrate it into your practice?
The Purpose of a Corporation
In 2019, the Business Roundtable made news by releasing a Statement on the Purpose of a Corporation, signed by 181 CEOs, including the leaders of ADP, Aflac, American Airlines, Apple, and AT&T and that’s not even a third of the A’s. Some of the biggest names in finance — Ameriprise, Bank of America, Blackrock, The Carlyle Group, JP Morgan Chase, and more were among the leaders signing the statement – a radical departure from the common thought of businesses existing solely to maximize profits – it marked a commitment to a broader base of stakeholders pointing toward what we call the emerging “We” mindset.
The Emerging “We” Mindset
For decades, forever really, investors have known that what they invest in matters. For returns, obviously – but every investment makes an impact. Investors have been finding ways to align their investments with their values for a long time. For example, in the latter half of the 20th century, there was tremendous growth in Socially Responsible Investing or SRI. Investors, wanting to align their investments with their values and to influence business and culture, would screen out companies that did not match their value set. In effect, SRI investors were punishing tobacco and gambling for example, for what they thought was poor behavior or having a negative impact on society.
The mid-aughts brought us the “ESG” movement- the belief that Environmental, Social, and Governance factors can effect the longterm financial performance of a company while giving investors an opportunity to reward companies for their corporate behavior through a positive screen.
And today we have “Impact Investing” – Generally, impact investing is investing with financial and non-financial returns in mind and measuring those returns. It’s giving your clients the ability to invest in the world they want to live in. So, how do you do it?
Integration Rather Than Re-Invention
We believe that for most RIAs, this is a matter of integration rather than re-invention. Be encouraged- we don’t think you need to reinvent the wheel. Rather than a complete overhaul, there are simple ways to integrate impact into your strategy. Think of it more as an overlay, another lens through which investments can be viewed, a lens that we would argue creates unique and compelling investment strategies and solutions.
So first, look at your client’s portfolio and, for most asset classes, there is a way to accomplish the same financial goals through this lens while also generating non-financial returns that align with your clients’ values AND benefit a broader set of stakeholders for the common good. If you need help finding those solutions, we’re here and happy to help.
The CommonGood Platform
Our platform provides RIAs access to private alternative investments aligned with investor values and the sustainable development goals. At any given time we have a platform of private credit, private equity, and real asset funds seeking attractive risk-adjusted returns as well as a positive impact for the common good. To the extent you are interested in investing in individual operating companies making an impact, we have an investment banking and advisory side to the business as well.
For advisors this means better alignment with their clients as they provide access to diligenced funds, managers, and operating companies, and actionable investment opportunities as the impact space and the desire to do good with investment capital continues to grow.