Advisers’ commitment to sustainable and impact investment crucial for sector growth
London, 25th June 2012: Expert knowledge and commitment to sustainable and impact investment can give investment advisers the competitive edge they need to stand out in a crowded marketplace, according to a new report analysing the current state of the UK advice-giving market, launched last week.
The research, titled “The Power of Advice in the UK Sustainable and Impact Investment Market”, was conducted by Susannah Nicklin under the auspices of the first Bridges Fellowship Programme, an initiative by sustainable growth investor Bridges Ventures. It reflects the findings from over 90 interviews with representatives from across the chain of advice including asset owners, consultants, social entrepreneurs, trade bodies and industry associations among others. It includes 15 case studies of advisers ranging from private banks to large institutional sector consultants to sustainability specialists and IFAs.
It found that, while there are already some outstanding specialist advisers in the sustainable investment arena, the vast mainstream investment advisory community itself needs advice and convincing to play a more active role in the market.
The report cites lack of human resources, limited investable universe and policy and legal constraints as some of the reasons many advisers are staying away from this sector. However, it also points out that those who decide to develop the required in-house expertise or build linkages with specialists will not only act as responsible corporate citizens, but will also bolster the resilience of their own business models, attracting more investors and deepening their relationships with existing clients.
Speaking at the launch event, held at Bridges Ventures’ London offices, Susannah Nicklin, the report’s author said: “Advisers can play a catalytic role in creating more sustainable capital markets and, despite the many challenges, our research shows there are now very powerful motivations for investment advisers to enter the sustainable and impact investment market. Those who have sufficient expertise to make recommendations in this space will be able to offer investors a valuable and hard-to-find service resulting in happier clients, potentially increased AUM and the opportunity to contribute to sustainable social and environmental benefit at scale.”
The report’s presentation was followed by a panel discussion in front of an audience of asset owners, investment managers and advisers. The panellists commented: Guillaume Taylor, Managing Director, Quadia SA: “For me, impact and sustainable investment is not just a question of ethics, feeling good or giving back to society, it is about the efficient deployment of capital. And, in my opinion, capital has to be deployed in a way that creates long-term sustainability. He added: “Interestingly we are seeing a lot of demand for our services coming from the major banking institutions who want to respond to the growing number of clients showing interest in impact investments.”
John Ditchfield, Director, Barchester Green, said: “If you are going to give advice to individuals on what they should do with regards to their financial planning, it is a fundamental and legal requirement under current regulatory framework in the UK that you get to know your client in the best way possible. It has always seemed logical to me that in order to really know your clients you should ask them questions about their values and help them make their investment decisions accordingly.”
Annachiara Marcandalli, MD, Cambridge Associates, said: “We are involved in this market because our clients have shown increased interest in the space. What we have seen is that clients show interest in principle but when they see that many of the investment options offer below market rate returns by design, we start losing some participants. So there is definitely a huge demand for sustainable investment products that can deliver strong returns but unfortunately there are just too few providers who are currently offering market rate returns, particularly in the impact space.”
Alexander Hoare, Partner, C. Hoare & Co., said: “It is difficult to try and measure up the demand for sustainable and impact investment but in my experience most of our clients are interested in discussing these issues. I would say that in 90 per cent of cases, a discussion of philanthropy engages the client and deepens the relationship.”
A copy of The Power of Advice in the UK Sustainable and Impact Investment Market, which includes a detailed review of the state of the market, case studies and profiles of market participants, can be found here
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Notes to Editors About Bridges Ventures Bridges Ventures LLP (“Bridges Ventures”) is a sustainable growth investor established in 2002 with a mission to use its commercial expertise to achieve focused social or environmental benefit, as well as attractive returns for investors. Bridges Ventures has raised six funds to date which total almost £275m: Sustainable Growth Funds I, II and III, the Bridges Sustainable Property Fund, CarePlaces Partnership and the Bridges Social Entrepreneurs Fund.
The Bridges Sustainable Growth Funds (I, II, III) invest in growth businesses across the four impact themes of Underserved Areas, Education & Skills, Environment and Health & Well-being. The Funds typically invest up to £10m at a time in ambitious, entrepreneurial businesses including early stage, growth capital and buyouts / buy ins. Since 2002, these Funds have made equity investments totaling over £75m in 34 businesses.
About Bridges Fellowship Programme The Bridges Fellowship Programme was established by Bridges Ventures to provide time and space for individuals to dedicate to thinking, innovating and writing about big questions in the fields of social and environmental entrepreneurship and sustainable investment. Fellows are supported by the expertise and experience within the Bridges Ventures team and its wider network, with the hope that they will be in a position to make a contribution to this sector of the economy in both a theoretical and, importantly, a practical way.
Susannah Nicklin, CFA Susannah comes to the Bridges Fellowship after nearly 20 years in financial services. She worked with Goldman Sachs in NY, Sydney and London as an investment banker and sellside analyst, and with AllianceBernstein as a private banker, heading up the family office practice in London. Susannah is now helping others engage with sustainable and impact investment and pursuing her own entrepreneurial ambitions. She is on the investment committee of the Berkshire Community Foundation, and is a Director of Pantheon International Participations PLC. Susannah holds a BA from Stanford University.
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