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Please Join Julia Wilkinson founder and CEO of imvest, along with Jim Frazer as they explore the answers to:
• What is ESG?
• What is impact investing?
• What is Net Zero?
• How has the ecosystem evolved?
• What are trends and opportunities in the sector?
• What are complications, obstacles and impediments?
• What are the implications for industry?
• What recommendations can be made?
• What does the future hold?
Here’s a brief snippet of the conversation:
Jim Frazer So Julia, that's been a great foundational description and history of ESG, as well as the challenges we face here today. So what let's move on to our next question in our in our sequences, what does that imply for impact investing itself? And what is impact investing?
Julia Wilkinson Let’s talk about that. Impact investing is different from ESG. Generally, in most impact investing, investors do have an ESG screen in their portfolio, but that's not the ultimate purpose of the portfolio. Impact investors are intentionally investing towards net positive and measurable social and environmental returns as well as financial. That means, let's say they set out with the thesis, I want to build a portfolio that is going to mitigate climate change and build resilience for adaptation purposes. So we at imvest are doing something similar right now building an impact investment portfolio of managers that addresses the systemic causes of climate change, and also focuses on adaptation. Now, that means that not only my screening out certain risks, and I'm concerned about making sure diversity and inclusion is considered, but really, the investments are focused not just on building something that is market rate driven, which is the goal of market rate driven, but also where the impact of the portfolio is specifically to contribute to a solution. So that's an important difference. That market is much smaller than ESG. So ESG, labeled investment, investment managers now account for one in every $3, globally, which is approximately, I believe, $40 trillion out of $120 million. $120 trillion assets under management globally. Whereas impact investing is only $1 trillion, it just hit the $1 trillion mark this year, which is exciting, because that means despite market shifts, people are still increasing their investments in impact. And that reflects that this is a much more nuanced, much smaller, niche focused managers that are doing this, which I also think is a good thing. All these issues that we're talking about, as we discussed are complicated. There's many causes and effects. Not all of them, as you mentioned before the call are completely proven that the cause has the effect that we understand. Right? There's still a lot of question marks. So these impact investors are really focused on a specific segment, let's say sustainable agriculture. How do we improve efficiencies, reduce fertilizer use, improve distribution of farms around the world so that they're not destroyed by a climate crisis?
Jim Frazer So would it be correct to state that impact investing is a subset of the ESG? ecosystem?
Julia Wilkinson Yeah, I would call it like a subset. Yes, because it's taking a step beyond ESG. And building a very nuanced, focused strategy. Personally, I believe that ESG will continue to grow, and that every financial institution, and probably every corporation will include some aspect of it in their planning, whether it's as complex as today or not, or even more complex, because we have more data and more understanding in the future. Eventually, everyone will probably scream and consider non-financial indicators in their decision making, but impact investing will probably take a little bit longer to become the norm.
Jim Frazer So impact investing as a subset of ESG might not be correct, and may well be in a Venn diagram where they both overlap.
Julia Wilkinson Right, because you can impact invest in every geography, every asset class, it's just an additional layer of, of scrutiny to you, where you're actually measuring KPIs towards these goals, right? How does my portfolio reduce emissions? And if it's not reducing it to the target I have, how do I shift and pressure my portfolio companies to change their business model to reach those goals? We're not just looking at the financial return as a goal.
About Julia Wilkinson:
Julia Wilkinson is founder and CEO of imvest, committed to building a sustainable future through social entrepreneurship, ESG, and impact investing. She helps funds, family offices, foundations, endowments and entrepreneurs to integrate impact into their models and investments. To unlock value and sustainable growth, she advises on portfolio construction, manager diligence, growth strategy, and impact measurement.
She is an angel investor and accelerator to high-impact startups, where she helps incubate their growth and sustainable value. Her VC experience includes several years with SV Latam Fund, investing at the intersection of high impact hardware and software innovation in the US and Latam.
Julia brings to the table 15 years of experience in capital markets. She has worked in private wealth management at Goldman Sachs, and alternative investing across asset classes and regions.