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Impact investing: A $250 billion game-changer for finance

Making money is the lifeblood of Wall Street. Making the world a better place not so much.Now that's starting ...

Posted: Dec 18, 2017 12:23 PM
Updated: Dec 18, 2017 12:23 PM

Making money is the lifeblood of Wall Street. Making the world a better place not so much.

Now that's starting to change, as some of the biggest names in finance adjust their businesses to reflect growing demand for impact investments.

"It's a $250 billion market and it's growing fast," said Michael Baldinger, a 30-year industry veteran who joined UBS Asset Management as head of sustainable and impact investing -- a new role -- just over a year ago. "It might really be a game-changer for the finance industry."

Banks and asset managers are thinking seriously about how to cater to investors who want a measurable social or environmental return on their investment as well as capital gains, stock dividends or interest payments.

"In the past you sold products to your client, now you empower your client to create a desired impact," Baldinger said. "As an industry we've had to rethink everything we do -- impact and sustainability is the Silicon Valley of finance and we want to be the Google."

Millennial market?

Impact investments were once the preserve of the super rich. Individuals and families would come together to identify promising opportunities to make money and do good at the same time.

But that's changing fast, too.

"76% of millennials see investment decisions as a way to express their social, political and environmental values," said Jackie VanderBrug, a managing director at U.S. Trust, Bank of America's wealth investment management business.

"When three quarters of a population are saying 'this is important,' that's huge," she added.

Before joining U.S. Trust in 2013, VanderBrug helped to start an impact enterprise focused on career development for underprivileged youth. She was instrumental in establishing Good Capital, a social investment fund.

Now she identifies impact investment opportunities, including portfolios with a minimum investment of $12,000 up to fully bespoke strategies for bigger clients.

Barclays is another major bank with big ambitions in this area. It launched its Multi-Impact Growth Fund in September aimed at smaller investors.

Damian Payiatakis, head of impact investing at Barclays, said the British bank wants to integrate the ethos of impact investing across everything it does.

"Our interest is not to add impact products to a shelf of investments," Payiatakis said. "Once you start seeing the world that way, it becomes obvious and you ask, 'why not,'" he said.

More work to be done

Still, there may be some way to go before impact investing becomes truly mainstream even as it continues to grow.

"While the idea that the only job of a company is to maximize financial returns to shareholders is still fairly entrenched, I think we have the wind at our backs in the form of our younger generations, who have higher expectations," said Deval Patrick, managing director of Boston-based Bain Capital's Double Impact business, and a former governor of Massachusetts.

"Many of those same individuals are taking a look at their investment dollars through a similar lens and with an expectation of social responsibility, so I expect the field to continue to grow."

For Baldinger at UBS, part of the growth can be attributed to greater transparency about impact investing, which gives the investor a choice.

"In the 1990s, I used to go to Starbucks each morning for my latte and my muffin. Then they started to show the calories next to it and that triggered something in me, so I stopped," he said.

"They created transparency for the customer. You can ignore it, but you have the information and you have a choice."

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 307519

Reported Deaths: 7096
CountyCasesDeaths
DeSoto20772248
Hinds19888408
Harrison17489302
Rankin13311275
Jackson13097243
Madison9895210
Lee9856169
Jones8290160
Forrest7523146
Lauderdale7187237
Lowndes6262144
Lamar610584
Lafayette6027117
Washington5280132
Bolivar4769129
Oktibbeha455297
Panola4442103
Pearl River4419139
Warren4280118
Marshall4273100
Pontotoc416472
Monroe4057132
Union403675
Neshoba3987176
Lincoln3869108
Hancock372085
Leflore3468124
Sunflower329389
Tate322681
Pike3180104
Scott310572
Yazoo304368
Alcorn297764
Itawamba296776
Copiah292965
Coahoma289677
Simpson287484
Tippah284668
Prentiss275659
Marion265779
Wayne261341
Leake261073
Grenada254982
Covington254580
Adams245882
Newton244859
George237847
Winston225981
Tishomingo222067
Jasper219748
Attala213273
Chickasaw204857
Holmes186471
Clay182454
Stone179131
Clarke176876
Tallahatchie175240
Calhoun163230
Yalobusha158836
Smith158534
Walthall130543
Greene129433
Lawrence126223
Noxubee125933
Montgomery125542
Perry125138
Carroll120826
Amite120041
Webster113432
Jefferson Davis105432
Tunica102525
Claiborne101330
Benton97225
Kemper95226
Humphreys94332
Franklin81823
Quitman78916
Choctaw72817
Jefferson64828
Wilkinson64727
Sharkey49617
Issaquena1686
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Alabama Coronavirus Cases

Cases: 518899

Reported Deaths: 10712
CountyCasesDeaths
Jefferson753641487
Mobile37763798
Madison33859494
Tuscaloosa25266443
Montgomery23962565
Shelby23106238
Baldwin20631300
Lee15524165
Calhoun14284311
Morgan14139268
Etowah13662345
Marshall11957219
Houston10380278
Elmore9993200
Limestone9811147
Cullman9470188
St. Clair9426234
Lauderdale9215227
DeKalb8746181
Talladega8058171
Walker7087275
Jackson6754110
Autauga6723103
Blount6483135
Colbert6203130
Coffee5399112
Dale4767110
Russell428838
Franklin419982
Chilton4083109
Covington4053114
Tallapoosa3893146
Escambia387674
Dallas3527149
Chambers3499122
Clarke346360
Marion3065100
Pike305875
Lawrence295395
Winston272372
Bibb256258
Marengo248661
Geneva245875
Pickens232959
Barbour224755
Hale218775
Butler212266
Fayette208960
Henry187844
Cherokee182044
Randolph176941
Monroe171440
Washington164038
Macon154548
Clay149354
Crenshaw149257
Cleburne146041
Lamar139234
Lowndes136453
Wilcox124327
Bullock121340
Conecuh109028
Perry107926
Sumter102932
Coosa99228
Greene90734
Choctaw58724
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