Institutional Asset Manager Newsletter 27.10.23

The rise of impact

Gill Wadsworth made an impact herself this week, writing that according to the 2023 Statehouse Report: Right-Wing Attacks on the Freedom to Invest Responsibly Falter in Legislatures, "despite all the hype" the vast majority of anti-ESG bills failed to progress through legislative chambers, including in 10 states fully controlled by Republicans. At present, 21 laws and six resolutions in 16 states have made it through legislatures this year.
However, the report concedes that the "despite the sheer danger and poor logic underpinning it" the anti-ESG movement "illustrates how right-wing influence groups are capable of steering Republican priorities in state legislatures, regardless of the impacts or popularity of their ideas".
Wadsworth writes that while anti-ESG legislation may be unpopular, the reality among certain sectors of the institutional asset management space is a general feeling that traditional approaches to managing environmental, social, governance risks are indeed flawed, lacking rigorous monitoring and assessment and are prone to greenwashing.
And among those is Patrick Galley, CFA at RiverNorth, an investment management firm and sub-adviser of the RiverNorth Patriot ETF, who says that the pushback against ESG is driving funds towards impact investing.
"Because impact investing seeks an outcome beyond financial return, it is also arguably more measurable and transparent than ESG. How many solar panels did the company install? How many disadvantaged kids received scholarships? By how much did health outcomes improve for veterans? Impact investments are made with the expectation of having these specific questions answered," he says.
Meanwhile, a new study from Schroders finds that in the US, Investors also see private assets as an opportunity to incorporate sustainable and impact investments into their strategy.
When asked about some of the key investment themes investors want to allocate to through private assets, 49 per cent of participants listed the technological revolution, followed by 39 per cent seeking to proactively allocate to private investments tied to the energy transition, a theme many believe will spur investment in innovation, creating significant investment opportunities.
Beverly Chandler, Managing Editor
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