Beats | March 30, 2017

Social impact is a tangible return on investment

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The social impacts of our investments “have a much more profound impact on the majority of savers” than the returns a financial manager is able to generate for any individual investor, writes Saker Nusseibeh, chief executive of Hermes Fund Managers, in a brief for the 300 Club of investment leaders.

“If we did not use the saver’s assets, pooled with others, to try to influence companies to reduce carbon emission and the price of water goes up, what use is that additional £95 per month [in investment returns] against a water bill which grows at a higher rate than that?”

The global club has made a habit of challenging conventional thinking. Nusseibeh argues that capital markets have become separated from the real world. Dysfunction in financial markets stems from an obsession with ’how’ to put our collective $75 trillion to work while neglecting the ’why’ question.

“The $75 trillion is not separate from the economic-social fabric we live in, but rather an intrinsic part of it,” writes Nusseibeh. “It is a tool we should use to control it.”

This post originally appeared in ImpactAlpha’s daily newsletter. Get The Brief.

Photo credit: Simon Dawson/Bloomberg