Investors increasingly want their investment managers to embrace environmental, social and governance (ESG) standards in the way but exactly what this means and how it should be applied is still inconsistent, a panel of experts told delegates at the annual Cayman Alternative Investment Summit (CAIS), being held in Grand Cayman this week.
In a session called ‘The impact revolution’ chaired by Julia LaRoche, a reporter at Yahoo! Finance, examined how the focus is increasingly on investment managers taking into account wider factors such as doing good for society other than simply financial performance when selecting their investment strategies.
LaRoche also noted that millennials will drive this approach in the future. “They have a different approach, different priorities and they want to put their money to work in a different way,” she said.
Seth Blackman, partner at KPMG, said that impact investing for him meant attempting to quantify the wider impact a company or an investment has on society. But he also acknowledged that quantifying this was difficult; doing so, however, would eventually happen and would drive growth in this sector.
He added that he has a passion for helping clients achieve success as they define it as opposed to what he or others define it and “Understanding the millennials why can be difficult but we need to see the world as they see it and in terms of their aspirations,” he said.
Asha Mehta, director of responsible investing, Acadian Asset Management, said that ESG means thinking holistically about the companies you are investing in and their wider impact on society.
“We started to look at this around ten years ago because investors started asking very different questions,” she said. They wanted a broader perspective of more than just the financials to consider anything that could impact investments. But we are only midway through what will be revolution in terms of investors look at using capital and the impact it can have in the world.”
She added that the use of data would also be critical to this market in the future. “We now have the tools to process unstructured data and this is a very exciting area,” she said.
Anna-Marie Wascher, founder CEO, Flat World Partners, agreed that the next generation want transparency and innovation and an alignment in how their money will be deployed. “But they also want high returns – their expectations are significantly different,” she said. “But there is a lot of real money being put to work in that way now increasingly understanding how this can fit into an overall portfolio.”
Millennials, Investment, Funds, Cayman Islands