Families see sustainable ESG investing as a business opportunity and family value
Heads of households committed to sustainable investing welcome the growing interest of private wealth holders to invest in the fight against climate change, but some warn that concrete steps must follow and insist that families can take the initiative for positive change.
Some families said they saw environmentally sustainable investing as a way for private and public investors to work together. Others see the discipline as a core value of the family business, or as part of a larger trend in environmental, social and governance investment over the centuries.
70% of families, foundations and individuals surveyed for the new Investing for Global Impact: Power for Good 2021 report told Campden Research that the transition to net zero has become “the greatest business opportunity of our time” because it represents a chance to benefit from companies and innovations that fight climate change.
Almost a third (30%) of global wealth holders targeted investments that directly supported a transition to a low-carbon economy. Almost a quarter (24%) sought to avoid companies they saw as major contributors to the problem of climate degradation.
CampdenFB asked family investors for their reaction to this change in attitude. Should it be the responsibility of sustainable private investors, such as family businesses, to lead by example for countries and businesses in the global transition to a low carbon economy?
Leon Fear (pictured left), third generation director of Fear Group, a UK-based international real estate investor, agreed that private investors have a “huge business opportunity” in embracing some of the changes to come as a result of the global drive to reduce emissions, in an attempt to impact climate change.
“Governments around the world can put the legislation in place, but it is up to private organizations, including family businesses and family offices, to make these goals a reality through sustainable impact investing,” said Fear.
“From our perspective at Fear Group, we have been focused on reducing emissions within our organization for some time, which includes, where possible, greener initiatives in construction and real estate development. With the construction industry contributing around 39% of all emissions, there is a clear opportunity to make a significant reduction in this sector.
Melissa Sesana Grajales (pictured right) is a new generation member of the diverse business of her Colombian family. She is also the co-founder and director of international relations of the private impact investment firm Asiri, headquartered in Bogota.
Sesana Grajales praised the prioritization of low carbon investments, however, she said there was some way to go between prioritization and action. Asset managers, wealth advisers and financial institutions are generally better equipped to come up with alternatives that respond to these shifts in priorities, she said.
“Over the past year, I have personally seen a huge increase in the private sector – single family offices, multi family offices, and so on. the general offering, ”said Sesana Grajales.
“I believe that sustainable private investors and those whose wealth is managed by large asset managers should absolutely seize the opportunity to signal to the market the direction of the fight against climate change. This can be done simply by asking wealth advisers to reveal the company’s approach to climate risk. From that point on, more advanced advocacy can take place through letter writing and requesting investment opportunities that reflect investors’ allegiance to the net zero transition.
Dilhan C Fernando (pictured left) is the Managing Director of Dilmah Tea and Dilmah Conservation, which works to mitigate and adapt the consequences of biodiversity loss and climate change. Fernando is the youngest son of Merrill J Fernando, who founded the global tea brand in Sri Lanka.
The New Generation Leader said family businesses should be defined by family values, which have gained greater relevance than ever before in the social, ecological and economic challenges of the global pandemic.
“There is no doubt that family businesses in particular and any investor, regardless of their strategic direction, should support a transition to a low carbon economy,” Fernando said.
“There are strong moral, ethical and survival reasons for doing this, but it is also the reality that innovation and opportunity are tied to necessity. As we learn to live with the health crisis linked to the pandemic and drugs are developed for more effective containment of Covid-19, our next greatest need is the mitigation of a climate emergency and its social dimensions, economic and environmental issues. “
London-based impact investor and entrepreneur Giorgiana Notarbartolo (pictured right) encouraged her multigenerational Italian family to invest their wealth, drawn from textiles and fashion, in ESG and impact projects. Notarbartolo said she was not sure she saw a change in attitude, as the research reported, but perhaps it was an evolution, representative of the climate change issue that is becoming mainstream.
“I don’t think the global transition will be led by a specific group of investors, it will be the result of collaboration with institutional capital, governments, industry, employees, consumers and private wealth”, Notarbartolo said.
Paul (pictured below left) and Wes Karger (below right), co-founders of TwinFocus, a Boston-based multi-family office, said they were not sure the find represented a change in business. attitude, but rather a different way for investors to align their investments with their philosophical values.
The brothers said empirical evidence suggests people have always sought to find meaning in their investments. They noted that Quakers and Methodists advocated avoiding businesses that could be socially harmful in the 1700s.
“The 1928 Pioneer Fund was the first to filter investments while more recent expressions include socially responsible investing in the 1960s-70s, program-related investment in the 1970s-80s, sustainable investing in the years 1990-2000 and most recently impact investing in the 2000-10s, ”said the Kargers.
“We see no reason why individuals cannot express their opinions by effectively directing their investment capital. In fact, we would go a step further and suggest that individuals express their views on capital markets rather than having the government impose their views on markets, where government regulation can lead to onerous externalities, such as this has been the case in the past. “