INFOGRAPHICS Dual Impact Investing: Improve the Planet and Your Portfolio’s Potentia

INFOGRAPHICS

Dual Impact Investing: Improve the Planet and Your Portfolio’s Potential

Published 2 months ago 

on November 11, 2021

By Jenna Ross

Dual Impact Investing: Align Your Investments With Your Values

Amid the popularity of sustainable investing, a challenge has arisen. Investors are becoming more concerned about “greenwashing”, where the financial industry makes false or misleading sustainability claims. In fact, 59% of global investors cite “greenwashing” as the biggest challenge to investing sustainably. Luckily, there’s a solution: dual impact investing.

Through dual impact investing, investors are able to better understand the effect their investments are having on the world. This graphic from New York Life Investments explains what dual impact investing is and explores a few of the compelling investment themes.

What is Dual Impact Investing?

With dual impact investing, the goals are two-fold:

• Enhance your portfolio’s potential: The fund invests in an environmental, social, or governance (ESG) theme with a growth opportunity.
• Make a social or environmental impact: The investment manager donates a portion of their profits to a designated non-profit related to the fund’s ESG theme.

This approach aims to increase return potential, while also contributing to a more sustainable future for our world.

Compelling Themes for Investment

To see what this looks like in practice, let’s take a look at a few of the investment themes.

1. Blue Economy

The blue economy involves targeting companies that are based in, and actively good for, the ocean. For example, this can include businesses focused on:

• Sustainable oceans
• Cleaner shipping
• Pollution reduction
• Carbon efficiency
• Clean energy

What is the opportunity?
U.S. blue economy sales growth was 5.1% from 2018-2019, more than double that of the U.S. economy overall. In addition, ocean-based exports are valued at over $2.5 trillion globally.

2. Green Transportation

Green transportation involves targeting companies that advance sustainable transportation through cleaner energy products and solutions. This can include businesses focused on:

• Transportation equipment and services
• Clean energy resources
• Technology that increases transportation efficiency
• Infrastructure components

What is the opportunity?
Global EV car sales are projected to increase more than 7.5 times from 2020 to 2030. More broadly, the global renewable energy market is projected to grow at a compound annual growth rate of 8.4% over the next decade.

3. Gender Equality

Gender equality involves targeting companies that are leading in gender equality within the workplace. For instance, this can include businesses focused on:

• Gender balance in leadership & the workforce
• Equal compensation & work-life balance
• Policies promoting gender equality
• A commitment to women’s empowerment

What is the opportunity?
Of global companies with gender diversity in management, nearly three-quarters report profit increases of 5-20%. Not only that, improving gender equality could stimulate economic growth. In a “best in region” scenario—where each country’s progress matches that of the country in its region showing the most progress towards gender parity—annual global GDP could rise by almost $12 trillion by 2025.

4. Heart Health

Heart health involves targeting companies that treat heart disease, or help people lead healthier lifestyles. This can include businesses focused on:

• Diagnosing or treating cardiovascular disease
• Promoting regular exercise and tracking fitness
• Healthy food and wellness products
• Health education through IT services

What is the opportunity?
The global cardiovascular drug market is expected to grow at a compound annual growth rate of 4% from 2020-2025. In addition, health conscious consumer-packaged goods saw impressive sales growth in 2019. For instance, fresh food sales grew by $4.6 billion.

Why Dual Impact Investing is Meaningful

By investing in these growing themes, investors have the potential to capitalize on shifting consumer sentiment and more stringent regulations.

The two-sided approach allows investors to:

• Express their values through their investments, by accessing ESG opportunities.
• Make a concrete impact, with contributions coming from investment manager profits—not investors’ own pockets.

Through dual impact investing, investors can improve their portfolio’s potential and the planet.

Dual Impact Investing: Improve the Planet and Your Portfolio’s Potential (visualcapitalist.com)

Dual Impact Investing: Improve the Planet and Your Portfolio’s Potential