Impact investing makes gains with clients

Do your clients want to make a social impact when they invest? Knowing the answer to that question may be part of your KYC obligations if CSA’s proposed targeted reforms are approved.

Regardless, clients who care about responsible investing may be interested in impact investing. In addition to a financial return, impact investing is meant to generate a measurable social and environmental impact.

Read: Most clients unaware of responsible investing

In the last two years (ending December 2015), impact investment assets in Canada increased to $9.2 billion. That’s a 123% increase, reports a survey published by the Responsible Investment Association. Most of those assets are held in B.C., Ontario and Quebec. Growth is fuelled by growing awareness and demand.

What clients say

The survey reveals clients use impact investments to:

• contribute to local community development,
• address environmental concerns through sustainability, and
• take advantage of financial opportunities despite cynicism.

Sectors with the most impact capital are:

• real estate, which may include mortgages that support inclusivity, community building and environmental sustainability (27% of all Canadian impact investment assets);
• clean technology (21%); and
• energy (13%).

The survey also shows 20% of impact investment assets are in public equities, up from 3% two years ago.

Read: Best ways to analyze energy companies

Almost all impact investors (96%) say the investments meet or exceed performance expectations. But investors would like more innovation in deals and fund structures and a common vocabulary to talk about and assess impact opportunities.

Growth is expected to continue through increased access, public policy changes and improved expertise among investment professionals.

Also read: Wealthy investors want new strategies

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.