LBS’s inaugural Social Impact week concluded on Friday with the Invest for Good conference.
The week was defined by a series of events exploring what it means to ‘do good’ through business, and as purposeful leaders. The Invest for Good event itself welcomed 240 students and investment professionals to LBS.
Attendees heard about the launch of LBS Impact Ventures, a student-led initiative that sources seed-stage companies with venture-grade growth potential and measurable social impact, and the first ever student-led impact investment fund in Europe. The launch comes at an interesting time for social impact investing, which is undergoing a period of wider recognition and integration with mainstream investment.
In her introduction to the fund, Naomi Koster, Treasurer of the LBS Impact Club noted: "This community is key providing critical mass around social impact investing in the school and the corporate world. Before LBS I enjoyed my job but I was missing purpose and it is events like this, which have expanded the opportunities and possibilities for me to have a fast-paced business job and combine it with a higher mission."
The majority of the day, however, was dedicated to learning from the 25 speakers representing Environmental, Social and Governmental (ESG) investing as well as impact investing. ESG uses responsible business metrics to identify quality companies in a variety of sectors, while impact targets a specific social outcome as well as a return to the investor.
Speakers spoke to students about how they fell into this industry. Marissa Blankenship, Director of Sustainable and Impact Investing UBS Asset Management spoke about how she "… can't imagine not investing this way - it has become part of who I am."
Mathieu de Sutter (MiF 2011), Executive Vice President Pimco, said he was led into ESG investing by his clients. He found people were employing ESG techniques but they weren't labelling it ESG.
Our keynote speakers set the tone by "myth busting" that ESG or impact investing is just for ‘do-gooders”. Opening keynote speaker Saker Nusseibeh, CEO of Hermes Investment Management, argued that there is no such thing as a "separate financial world" and that being good is not being financially viable. "That's a fallacy," he said. "It is bad business not to be socially responsible. Business is a heuristic to live better in the future...in the long-term responsible business is in our self-interest."
Concluding the day, David Blood, co-founder and Senior Partner at Generation Investment Management, said he saw no trade-off between returns and his company’s use of ESG tools.
“One of the challenges of the industry is we don’t have a common language, however, all investments have an impact,” he said. “And soon we will be evaluating all investments in terms of risk, return and impact. Impact can mean you are prioritising impact over return but certainly all investment has impact.
“Where I feel more strongly is that we confuse ethical investing, sustainable and socially responsible investing, which tends to be based on exclusions – choosing one opportunity set over another. Sustainable investing, which is what Generation practices, is not that. We are fully integrating sustainable with ESG factors and using them as tools to evaluate businesses. We are using this framework to drive superior risk adjusted returns. We don’t think that Generation is trading values for value, we think it is a superior way to deploy capital.”
The consensus from the conference was that while the vocabulary is not yet established, the principles of "investing for good" are delivering more than market differentiation but also returns, which institutional and private clients are increasingly demanding.