The GIIC in practice – investing for impact
This month Texel launched its Green Impact Investment Contribution Initiative (GIIC). Through the GIIC all net profit earned by Texel from sustainable transactions will be invested into an environmentally focused impact investment portfolio managed by award-winning impact wealth manager Tribe Impact Capital.
We caught up with Jamie Innes, Investment Manager & Partner at Tribe Impact Capital, to find out more:
Jamie Innes, Investment Manager & Partner – Tribe Impact Capital
Can you tell us a bit more about Tribe (for those who don’t know)
At Tribe, we believe your wealth should reflect who you are. We do this by aligning it to each clients’ values, financial aspirations, and the change they want to see in the world — their impact. We set up Tribe with a clear goal: to help those who invest with us to achieve financial returns but also to bring about positive change for people and planet. This means we only run portfolios for positive, sustainable impact. Sustainability is at the core of everything we do, from our mission as a business, our operations, and the offering to our clients.
While some wealth managers offer impact investing as a small part of a broader portfolio, Tribe solely invests in businesses working for the benefit of society and the planet. We were the UK’s first dedicated impact wealth manager, supporting a strong movement of investors committed to creating positive change.
As our wealth manager, how do you invest Texel’s capital for impact?
We start by guiding clients through an interactive assessment designed to help us understand where to invest their wealth. Their attitudes, preferences, and financial needs are all captured in this assessment to define what we call their ImpactDNATM. An important aspect of this is how they interpret the UN Sustainable Development Goals (SDGs) which helps us to decide where best to focus their investments.
Our process for assessing impact is based on very specific criteria and we carry out deep analysis into the businesses themselves to understand how they align with the SDGs. We do this with both direct investments, and through our funds. Once invested, we regularly review your portfolio positions and have ongoing engagement with companies and fund managers. This approach allows us to ensure that your long-term impact goals are being met alongside your financial ones.
Can you explain your investment philosophy/process?
Our investment philosophy is simple: We look for well run businesses that are working to solve global challenges. At Tribe, every investment is assessed for both its investment and impact credentials – the potential monetary returns it may deliver, as well as its social and environmental outcomes. We call this our ‘twin-lens approach’.
Only investments that meet our stringent criteria for these are placed into what we see as our ‘investment universe’. This isn’t just about negative screening; it doesn’t simply mean ruling out investing in companies with bad practices. Instead, our approach takes a much more detailed view of which opportunities may have a positive impact.
Our two due diligence processes — of investment and impact — run in parallel, with each team having a say over whether an investment is approved. While their processes are separate, the teams work closely together to understand the merits and/or potential risks of an investment.
What’s the difference between ESG investing and impact investing?
ESG and impact are often confused, they’re a part of a sustainable investing framework but they have key differences. ESG is a scoring system used to rate companies across different sustainable criteria – environmental, social and governance. We see ESG as part of a strong risk management framework but one that doesn’t consider important nuances of sustainable investing. ESG screens simply look for companies that score highly, without looking at the underlying product/service – what the company is solving for.
Impact investing goes beyond ESG, actively looking at the core products and services that are being produced by the company – what the company is fundamentally doing and how the company is driving towards the attainment of the SDGs.
Finally, climate change/ESG is a key topic today and it shows that companies are increasingly aware of the role they can play in being part of the solution. To finish, we would like to ask you why and how are you personally passionate about climate change?
It’s worth mentioning that we don’t just focus on climate change. While it certainly seems to be at the front of many investors’ minds at the moment what we see as ‘Social’ factors are equally as important. For example, one of the lead SDGs for our clients is Goal 4 Quality Education and this goal is closely connected to climate change. Higher educational attainment in females is often linked to lower carbon emissions. An understanding of the interactions and interdependence of all the SDGs is important.
With regards to why we’re passionate about climate change, simply put, climate change is possibly the greatest existential threat currently facing all life on earth. Weather impacts water, agriculture, transport and economic systems. The immediate threat of weather events is increasingly evident and we’re seeing more instances of flooding and drought across the globe, which will lead to devastating long terms impacts like mass migration from those areas most affected.
How are we demonstrating our commitment to combatting climate change? In September 2019, at Tribe we declared a ‘Climate Emergency’, holding ourselves accountable as a business to become net zero across Scope 1, 2 and 3 emissions by 2025. We’re currently setting our ‘Science Based Targets’ with a view to mitigating our contribution in line with what’s required by climate science and the Paris Agreement. To do this we’re working both internally and externally to understand the temperature footprint embedded in our investment universe. We were also the first wealth manager in Europe to be awarded B Corp certification.