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04 April 2019 • Articles

Gavin Hinks

What impact investments mean for boards



Impact investing is making waves in the financial world. Based on the idea that asset managers invest “to positively contribute to social or environmental solutions”, the strategy has already attracted some big-name fund managers.

Financial writers and observers are quick to rave about impact investment and its growing importance. After all, it’s one of the fastest growing areas of the fund management industry and it is aimed at doing good. It’s good for business and reputations.

So what implications will this have for board members who have to answer to asset managers?

Boards interested in pleasing impact investors will need to be clear on two things, according to David Shammai, Morrow Sodali's cross-border director, corporate governance, knowing how the shareholders on your register are interested in impact investing; and how their reporting and disclosure activities would support a claim for impact capital.

He adds, however, that there is good news in the impact approach because it represents an “upside opportunity” for boards and shareholders alike.

“When you talk about traditional ESG [environmental, social and governance investing], it’s about optimising and controlling risk associated with non-financial factors,” says Shammai.

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