What made you launch Tribe in 2016? Did you know that impact investing was very popular at the time?
In many respects, the tribe was founded out of frustration. Despite advertising that finance is one of the best industries for risk awareness, it didn’t really understand the level of risk it faces.
Many companies have removed most of the basic components that build a successful society and economy, then called them externalities and told their clients that they were not part of the decision-making process.
Another frustration is that the mediation of wealth-the encouragement of this retreat and non-engagement-means that people are separated from their wealth.
People’s money should reflect the food they eat, the clothes they wear, the cars they drive, and who they are, just like the homes they live in. This does not happen with an investment.
One of the greatest powers we have is in the wallet and we need to reconnect people with the notion of what we are doing with money. Voting does more than just fill out ballots every four years.
One of the biggest headwinds against this concept is greenwashing. How can the industry tackle this, and how difficult does this make it difficult to build a portfolio for our clients?
This is a daunting task, as the quantity of products that claim to be sustainable or climate change suddenly grows enormous.
IM Influence Maps recently said that of the 723 funds surveyed, 520 took into account the Paris Agreement, but found that 71% of these funds were negatively adjusted. To make matters worse, 55% of those who claimed to be aligned were the opposite. SFDR is advancing in some way to deal with this, but it is a self-certification system.
First, Article 9 focuses on the process by which the fund is ultimately adjusted in terms of sustainable investment. However, that does not necessarily mean that, for example, the endowment is substantially contributing to the development and realization of the framework of the United Nations Sustainable Development Goals. This means that the processes and policies in place to manage the long-term sustainable risks embedded in the fund are in place.
If even Article 9 is not a panacea, how should investors look at Article 8 funds?
Article 9 is clearer about what investors can expect, but Article 8 is much broader. Many funds that originally claimed to be sustainable are no longer possible as they are now in the Article 8 category.
For me, Article 8 is always about ESG, in which people’s approaches are very diverse. This is partly due to the differences between ESG rating agencies when looking at the same company and the fact that ratings are historical information.
Article 9 The fund framework is more positive. As an investor, you really want to get an idea of the direction of a company’s move in the manager’s portfolio.
How do you analyze the fund in Article 9?
The fact that the fund is Article 9 means that the fund is likely to be considered for approval by us-much more than the previous Article 8-but our due diligence. Due diligence is the same.
My slight concern about SFDR is that other wealth managers may take this at face value and say “that’s enough”. However, this is not always the case. SFDR is useful from a due diligence perspective, but you really need to understand managers, processes, philosophies, and performance (both past and forecast) before making a decision.
What are good qualitative indicators for evaluating good impact managers?
One of the questions we ask all fund managers is “what are you trying to solve with this fund?”
That is the most obvious question you can ask as an impact investor. There are so many fund managers who can’t answer this question, often because they don’t understand the nuances of the question.
They often say: “Well, we are a growth-based fund and we aim to beat this benchmark in X, Y, or Z.” But we say they I want to know the big climate and social problems that they are trying to solve materially with their funds.
I often thought it was a good question for the FCA to start asking fund managers. Because the manager said, “I have a portfolio of 50 shares with a decent ESG rating. We don’t own oil and gas, we do. It’s mostly high tech.”
There are major ESG issues within the tech sector anyway, but bye-bye. This is exactly what ESG funds do-they bring together companies that have gone through some sort of rating system.
Let’s face it, the smart players there can play the system if they want.
Frankly, ESG funds often aim for sluggish outcomes because it’s just risk management.
Q & A with Amy Clarke of Tribe Impact Capital
Source link Q & A with Amy Clarke of Tribe Impact Capital