Money Management Institute Sustainable Investing Community
February 13, 2019
A suite of educational resources for engaging clients on sustainable investing

Letting Loose the Crazy Uncle

For all its buzz, impact investing—the practice of investing with the intention to generate
measurable social and environmental impact alongside a financial return—remains a relatively niche phenomena. This, despite its headline-generating promises to save the world from the issues created by skyrocketing deficits, uncertain financial markets, and staggering need.

2/13/2019
Letting Loose the Crazy Uncle
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Impact Investing
Letting Loose the Crazy Uncle
A new report explains how the nancial services industry can better harness impact investing to serve client
demand.
By
William Burckart
Jun. 26, 2014
or all its buzz, impact investing—the practice of investing with the intention to generate
measurable social and environmental impact alongside a nancial return—remains a relatively niche
phenomena. This, despite its headline-generating promises to save the world from the issues created by
skyrocketing decits, uncertain nancial markets, and staggering need.
The recent release of a
progress update
(https://www.gov.uk/government/uploads/system/uploads/attachment_data/le/321380/2014_Social_Investment_Strategy.pdf)
on the UK Government’s eorts to help build the social investment market and a subsequent meeting
of the
Social Impact Investment Taskforce
(https://www.gov.uk/government/groups/social-impact-investment-
taskforce)
, revealed that much work remains to build a robust market of impact investment activity.
As Kieron Boyle, head of social nance for the UK Cabinet Oce, commented at
Impact Economy’s
Symposium
(http://impacteconomy.com/en/2014.php)
a few days before the release of the report, critical areas
that need further attention include “making it easier to be an impact investor, building capacity
amongst social ventures, and opening markets.”
In the nancial services industry in particular, various factors are contributing to growing awareness of
impact investing, with the prospect of servicing latent client demand (i.e., future business growth) chief
among them. This is due in no small part to the projected massive 41 trillion intergenerational wealth
transfer between the Baby Boomer generation and their beneciaries.
A number of nancial institutions are utilizing parts of their institutional platforms as a result, but less
observable has been a push toward aligning these programs with various organizational functions,
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Letting Loose the Crazy Uncle
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including advising, originating, trading, managing, and distributing capital. The fragmentation of
practice is raising questions over how to approach these activities and optimally integrate them within a
leading global nancial institution.
The new special report “
Serving Client Demand for Impact Investing: A How-to Guide for Financial
Advisors and Senior Management
(http://www.impacteconomy.com/en/wp5.php)
,” produced by
Impact
Economy
(http://impacteconomy.com)
in collaboration with the
Money Management Institute
(http://mminst.org)
, explores how major nancial advisors and institutions are embracing impact investing. It also suggests
how they could go further and optimize both the impact and nancial proposition of these kinds of
investments by venturing to actually align them, making impact both commercially viable and socially
transformative. The report provides a status of the impact investing market and unpacks the
motivations, dimensions, issues, and opportunities that investors and rms encounter when creating
impact investment programs.
Many of the proled rms are utilizing components of their institutional platforms—using
philanthropy, CRA-motivated lending, ESG and SRI, or wealth management to match client demand or
meet compliance requirements. For example, major nancial service providers such as Citigroup and
Goldman Sachs have either launched impact investment or impact-related investment divisions (the
term given to practices that are functionally similar to impact investing) to strengthen or meet corporate
citizenship and philanthropic mandates, or invested in impact investment projects to diversify wealth or
asset management portfolios by gaining exposure to dierent sectors, populations, and geographies.
Within a systems framework, though, integrated impact investment initiatives can develop positive
feedback loops with core wealth or asset management practices, irrespective of whether they help to
meet philanthropic or compliance mandates. This is evident in Morgan Stanley’s new
Institute for
Sustainable Investing
(http://www.morganstanley.com/sustainableinvesting/)
, which oers wealth management
clients access to investment products with values alignment, ESG integration, various sector exposures,
and impact-specic products. This platform, which resides separately from the other divisions of the
bank, is actually preparing the institution for the volume of client demand it anticipates.
Similarly, JPMorgan Chase has a dedicated business unit for impact investing, which is aligned with the
rm’s corporate responsibility division and investment bank. In this way, the business can help fulll
the rm’s broader mandate to put its capital, resources, and network to work in advancing solutions to
critical social and environmental challenges faced by its stakeholders. According to Bruce McNamer, the
head of global philanthropy, this setup “fosters greater collaboration amongst the initiatives within the
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Letting Loose the Crazy Uncle
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rm that provide community impacts while leveraging the nancial structuring and advisory expertise
of its business divisions.”
A seemingly alternative approach is to actually embed impact investing across the divisions of an
institution. As Mark Sloss, senior portfolio manager and head of Premier Portfolio Services at UBS
Wealth Management Americas commented, “Impact investing should not be cloistered like the crazy
uncle in the attic.”
In our experience, integrated impact investment initiatives can position the industry to respond to the
nancial motivation for impact investing, regardless of the ultimate institutional approach.
Thus perhaps the time has come to let the crazy uncle out. Despite his eccentricities, he is looking more
and more like the rich uncle—aligned with the priorities of the soon-to-be owners of $41 trillion in
global capital and potentially a harbinger of the future of wealth management.
William Burckart
William Burckart
(
@billburckart
) is the managing director of Impact Economy (North America) LLC
(
@impact_economy
). He is also a contributing author to the recently released
New Frontiers of Philanthropy
(ed. by Lester M. Salamon, Oxford University Press).
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