Hurrah for GIIN

Written by Lisa Stanley Mann on 6th December 2016

No….not that Gin…but GIIN, the Global Impact Investing Network, whose latest research shows an 18 per cent increase in the assets under management of its members.

This means that more and more people are looking to invest their money sustainably and responsibly. And what’s more, an increasing number of investment managers are getting better returns BECAUSE they are looking after the planet, not in spite of the fact.

Further evidence of the profitability of impact investment was backed up by separate research published this week, which showed that low carbon companies have returned 9 per cent a year more, on average, over the last five years, than carbon intensive companies.

The research from ET Index, a global research company, looked at the performance of the world’s 2,000 largest listed companies and calculated the amount of carbon they emit for every million dollars of revenue they generate. It found that carbon-efficient companies have outperformed carbon-intensive companies over the last five years by at least 9%.

The report demonstrates that investors can help drive decarbonisation of the economy and make money by switching investment to companies with above average carbon efficiency for their sector.

The GIIN report, Impact Investing Trends: Evidence of  Growing Industry, shows more than 85 per cent of GIIN investment management members are meeting or exceeding returns expectations every year. The data is taken from 62 investment management firms in the responsible or impact investment sector.

Amit Bouri, co-founder and CEO of the GIIN says: “Our report provides compelling evidence of a growing impact investing industry. Impact investing is a powerful movement driven by investors of all types who are effectively putting their capital towards solutions to issues in areas like conservation, education, and affordable housing. The positive trends support that investors are increasingly bullish about the use of capital to address social and environmental challenges, and we are confident that this trend will continue.”

Carbon risk has become a concern among investors following the Paris Climate Agreement, which commits countries to keeping global temperature rises well below 2°C. A task force set up by the international Financial Stability Board is due to make recommendations this month on how companies should report on the potential impact of climate change on their bottom line.

Isabelle Rucart, EMEA Head of Sustainable ETFs Index Investments at BlackRock, said: “We think that incorporating climate considerations in the investment process should and can be a fiduciary duty. On top of this, low carbon indexes have the potential to perform in line with or better than parent indexes.”

Jon Williams, Partner, Sustainability and Climate Change, at PwC, said: “It is quite clear that the low carbon transition is underway, with carbon intensity falling 2.8% globally in 2015.  As a result, investors will be increasingly asking companies to disclose the risks and opportunities arising from climate change.”