Venturing for impact

Impact investing is an investment strategy in which the investor strives to achieve both a financial return and a social and/or ecological return through investments. The impact investor realises that the combination of capital and innovation can make a contribution to addressing enormous global and local challenges such as climate change, poverty and the degradation of ecosystems. Impact investing is possible within a series of conventional investment categories such as private equity, private debt, real estate, listed shares and listed bonds.

There is a growing consensus that socially responsible investments do not have a negative effect on financial returns. And, in an increasing number of cases, they are even showing positive effects or financial returns. There are also increasing examples of investors that have structured their investment portfolio entirely on the basis of an impact investment strategy.

Studies that have focused on the relationship between socially responsible investments and financial returns include the following:

• Cambridge Associates & GIIN: An analysis of 51 private equity impact funds concluded that the impact funds achieved an average return of 6.9%, compared with 8.1% for traditional private equity funds, while the smaller impact funds (<$100 million) achieved a return of 9.5%, compared with 4.5% for traditional funds. Introducing the impact investing benchmark (2015)
• Morgan Stanley: Investing in sustainable funds usually results in average or above-average financial results. In the majority of the periods studied, the sustainable funds produced equal or better performances with a comparable or lower volatility compared with the traditional funds. Sustainable reality: understanding the performance of sustainable investment strategies (2015)
• Deutsche Asset & Wealth Management: A meta-analysis of 2,200 studies concluded that 90% of the studies found no negative financial effect resulting from adhering to ESG criteria and, depending on the selection of studies, 48-63% of the studies confirmed the presence of a positive financial effect; with a positive effect being found more often in the investment categories of real estate and bonds. ESG and Financial performance: aggregated evidence from more than 2,000 empirical studies (Friede, G et al, 2015)
• Oxford University: A meta-analysis of 200 studies concluded that 88% of the studies confirmed that companies with a strong sustainability policy achieved better operational results, which produced better cash flows. From the stockholder to the stakeholder (2015)

Wire Group deploys its knowledge, experience and network to identify interesting, high-quality impact investments worldwide, including both impact funds and direct investments in impact companies. The range of available impact investments is growing steadily and broadening all the time. Although there are exceptions, the starting investment amounts are generally EUR 250k or EUR 500k. We would be happy to familiarise you with our 'pipeline' of investment proposals.

At the request of our clients, we conduct further research (‘due diligence’) into all investment proposals in order to analyse the commercial, financial and impact assumptions that form the basis of the investment. Our goal is to provide as much insight as possible into the opportunities and risks of the investment proposal concerned to enable you to take a well-founded investment decision.

Wire Group does not provide investment advice as meant in the Dutch "Wet op het financieel toezicht". We can refer clients to an AFM licensed advisor or asset manager.

No, it is not necessary to have an impact investment strategy. It can be very satisfying to make a good impact investment occasionally.

An impact investment strategy can help you to give impact investing a clear place within your investment portfolio and to make more conscious choices. Within the context of an investment strategy, you can also give explicit consideration to an investment’s potential impact, risk and return, as well as focus on the investment categories that you find particularly interesting. Drafting an ‘Impact Passport’ or further studying an impact theme that lies close to your heart can help to give shape to such a strategy.

Little or even a total absence of preparation and a scarcity of communication about money and family dynamics within a family seem to be the most significant causes for the dissipation of family capital.

As a parent, you want your children to find their own identity, to have self-esteem and to be able to play a role in society. But is this desire held despite or because of the family’s capital? The fears of well-to-do parents are often focused on three subjects:

1. Self-initiative: do my children have or can they maintain the motivation to organise their personal future, also without the family capital?
2. Material: will my children attach too much importance to material possessions?
3. Partners: how can I deal with my children’s (un)desirable choice of a partner with respect to the family wealth?

It is important to discern when children are ready to take on responsibility. How can you prepare children for this? Our experience at Wire Group tells us that Impact Investing can be a very good ‘instrument’ to use to teach children about family capital. Because Impact Investing is driven by (family) values, it is a powerful way to start a discussion about relevant subjects such as “what does value mean?” or “what would you like to contribute to the world as a family or as an individual”. At the same time, it gives you practical experience with all aspects of investing. Because there are leads for both business-minded and more intuitive/socially oriented family members, it promotes cooperation between them and family bonding. This deepens understanding and is a source of enjoyment. We would be happy to share our experiences with you to show you how to give concrete shape to this.