Almost all investment has collapsed onto a simple idea of maximising your return. But what if you don’t want your investments to harm society and the world? What if you want to help the world and make a great return? What then? Into this gap steps ethical and impact investment.
Tom is CEO of Tickr which he co-founded to open up impact investing to the general public from as little as £5. As well as a career in this area he also did a masters at Oxford Business School on the topic so is well-placed to guide us thorough the maze.
Some of the first ethical investment funds were shariah-compliant Islamic funds. With these in broad terms ethical means not investing in alcohol and armaments and other such categories. At a more detailed level a religious authority rules on whether an individual company is or isn’t “ethical”.
Ethical investment is clearly A Good Thing but once it spread to more secular lands definition became problematic. Furthermore it turned out that between “all white” and “all black” investment lay a huge grey area.
More recently impact investment has appeared on the scene where the focus is not so much avoiding investing in “bad” companies but targeting “good” companies.
Once again though we have a problem that in the real world good and bad are not black and white. For example I might consider Brewdog to be a great company – ethical and impactful (as producing great beer responsibly seems to me both ethical and impactful). However for you this might be neither ethical nor impactful?
So if the principle is simple – ethical investment is clearly Good and impactful is clearly Good. But who defines? The challenge lies not in the concept but in the practical implementation.
Topics discussed include:
- the breadth of areas that Fintech is expanding into
- bedrooms in the office
- the world pre interweb/constant-on-ness
- the need to consciously ensure one switches off now and then
- Tom’s crazy Easter schedule
- the origin of the McGillycuddys
- the challenge for most of our families a century or more ago – life was much tougher
- the reality of history being almost entirely co-operation between men and women not conflict or soi-disant “oppression” – it was seriously tough surviving let alone bringing up children
- Tom’s career journey
- strategies for not looking too much at the news
- market beating returns from ethical investment
- case study of a housing company in India and how it changed lives
- investing for purpose as well as simply return
- tickr invest in Global Listed Equities
- ethical means a lot of things to different people
- impact means things like investing in companies that provide clean water, housing etc
- ethical investment involves ruling-out certain companies
- ESG investment – Environmental and Social Governance – invest in companies that meet these criteria
- impact investment involves ruling-in certain companies
- the challenge of an oligopolistic world when vast companies do a vast range of activities; percentages of income as the pragmatic measure
- aiming to “be better/more focused” than the index rather than “completely whiter than white”
- tickr aims to have more impact than the index – not perfection – and aiming to maximise that gap
- climate change as an example of a factor that drives impact investment but the challenge in a politicised world of deciding whether (or more precisely to what extent) it is true
- screening process to rule-in(/-out) is done annually
- one study showed ~25% of global investments have a positive impact (defined appropriately for the study of course)
- enough to produce a diversified portfolio
- custodial management of invested cash/assets
- exchange rate risk as an important factor in global investment
- tickr charge 0.7% fees – have more radical plans to innovate in this area
- impact investors are not fee sensitive especially as this is not easily accessible in the market and the fees are in-line with market
- tickr is available in the UK, plans to expand into Europe
- “you can make money and have a positive impact – that’s what we are trying to do”
And much much more 🙂
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