Rich Millennials Push To Put Family Wealth Into Impact Investments
What’s happening? Younger family-office managers are urging their parents to make ESG or impact investments in lieu of philanthropic giving. Some 93% of millennials believe ESG impact is important in investment decisions, reported Sarah Murray in the Financial Times.
Why does this matter? While sustainable investments and philanthropy are not necessarily mutually exclusive, they can serve similar functions for investors.
Charitable giving has often been used as a means of offsetting the social or reputational costs of an individual or a company’s core business practices and investments, with the net positive societal outcome therefore debatable.
Philanthropy sits in apposition to the conventions of capitalism, while impact investment is embedded in the market system, potentially improving its impact on global societies.
Conveniently, sustainable investments offer substantial returns, at times more so than traditional investments, with the added benefit, in this case, that family offices feel less obliged to donate some of those gains to charity.
Given all investments are relative, and ESG metrics remain under-developed, there is risk such investments do not have their intended impact. We should be cautious about valuing every investment through the lens of financial gains, since many causes, such as human rights development charities, are unlikely to deliver short- or medium-term financial dividends, but are worthwhile all the same. It is clear there is still a place for philanthropy, too.
Lateral thought from Curation – Could this reshaping of the approach to doing good mark the dawn of social enterprise in mainstream finance? Social enterprise views business and doing good as jointly beneficial, in a similar way that ESG investment does, incorporating a social conscience into core business activities.
- The case against billionaire philanthropy, Vox
- How impact investing can complement but not displace philanthropy, Financial Times
- Jeff Ubben’s ValueAct launching fund with social goals, CNBC
Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.
© The Sortino Group Ltd
All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or scanning or otherwise, except under the terms of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency or other Reprographic Rights Organisation, without the written permission of the publisher. For more information about reprints from AlphaWeek, click here.