Impact investments becoming important piece of the pie

Impact investments becoming important piece of the pie

Impact investments becoming important piece of the pie One of the world’s largest investment managers is pushing farther into socially responsible investing. Are advisors aware of their clients’ big-picture wishes?

BlackRock announced Monday the creation of Impact, an initiative that helps its clients invest in products with environmental and societal goals. Increasingly, people are looking to socially responsible investing as a way to impact the world while also increasing the value of their investment portfolios.

An example of an existing BlackRock product that addresses ESG (environmental, social and corporate governance-related) issues is the iShares MSCI ACWI Low Carbon Target ETF (CRBN), which invests in large- and mid-cap stocks in developed and emerging markets with lower carbon exposure.

NYSE Arca-listed, CRBN not only gives investors a portfolio of SRI-related stocks but does so while also providing global diversification across developed and emerging markets. Operating for just two months it’s managed to attract almost $144 million in total net assets which if traded in Toronto would make it a reasonably big ETF in Canada.

In others words, it’s a pretty big deal.

But why should advisors care? We reached out to Northland Wealth Management CEO Arthur Salzer for his thoughts on the subject.

“It is great to see that impact investing is beginning to take centre stage through this new product offering from Blackrock,” says Salzer. “The key will be to measure the ‘impact’ that occurs just like the financials are measured and reported to investors. From my discussions with Justin Rockefeller, for the most part, the measurement of impact is much easier if done through a private company versus a publically listed entity."

"Therefore, while it is admirable that a large, well-known firm is taking notice in this sector, ‘the proof will be in the pudding’ so to speak… I am sure that everyone is hopeful of that.”

While Salzer’s multi-family office focuses on the ultra-high net worth client, his words are appropriate for any advisor with clients looking to do well by doing good.

BlackRock’s move signals impact investing is here to stay.

Note: The WP Awards are June 5, 2015. Nominate your favourite advisor or practice dedicated to providing outstanding socially responsible investment strategies for their clients. Click here to do so.