Covid-19 pandemic accelerates families' growing interest sustainable investing

Family philanthropists agree the Covid-19 pandemic has accelerated their sustainable investments, not only driven by their re-evaluation of wealth with purpose priorities, but also by changing consumer expectations and gainful market returns.

The families, foundations and individuals surveyed for the new Investing for Global Impact: A Power for Good 2021 report told Campden Research they had accelerated their portfolio allocations to sustainable investing. during the pandemic. The increase was an average of 36% in 2020, up from 20% in 2019. The average allocation was predicted to rise significantly to 47% in 2022 and to 54% by 2027.

CampdenFB asked its panel of family principals if this remarkable increase matched their own experiences in their sustainability ventures and among their peers.

Melissa Sesana Grajales (pictured below) is a next-gen member of her Colombian family’s diversified business, Inversiones Brembo. She is also the co-founder and director of international relations at the privately held impact investing firm Asiri, headquartered in Bogota.

Sesana Grajales said her experience and observations matched the report’s finding.

“I think the pandemic gave us a time to stop and reflect on the interconnectivity of our systems,” she said.

“I think this time invited us to think about the systems that aren’t working, not only environmentally but also socially.

“From the perspective of my family and my investment vehicle, we saw this as an opportunity to really think about our values in relation to the situation and assess how we could use the resources at our disposal to bring attention to systems that are simply not working and support alternatives.”

Sesana Grajales said one particular investment Asiri made during the pandemic, which she thought could have important implications for climate change mitigation, was her team's investment in 1s1 Energy.

"1s1 Energy is developing a proton exchange membrane, or PEM, that will ultimately enable production of economically viable green hydrogen through water electrolysis and re-electrification with the use of cells," she said.

"Hydrogen is a very exciting space where there have been huge advancements in recent years. 1s1's PEM could produce electrolysed hydrogen to replace 'grey hydrogen'—hydrogen produced by fossil fuels—in today's applications, in doing so eliminating associated emissions.

"Green hydrogen has the significant potential of decarbonising steel productions, heating and commercial transportation, the impact of this could be a 36% reduction of yearly global carbon dioxide emissions."

Dilhan C Fernando (pictured right), next-generation chief executive of Dilmah, said the significant increase in sustainable investing was a logical outcome of the world’s pandemic circumstances.

Consumers were intolerant of any industry that was not sustainable and were increasingly vigilant of waste or environmental harm, Fernando said.

“This produces fundamental change which in turn demand a change in assumptions driving investment.  It should be clear that investing in an unsustainable activity can at best be short term.

Fernando said his family’s business in Sri Lanka was formed by his father’s unique philosophy, that business should serve humanity since success was a blessing that must be shared.

“We have therefore operated our core and allied businesses around this principle and can unequivocally state that there is no greater fulfilment than in seeing the impact that a business has beyond profit. Whether connected to a family’s values or to the basic human desire to do good, sustainable investing in your own or other businesses delivers satisfaction that goes significantly beyond financial benefit. The increase [the report] refers to will only continue to grow as businesses recalibrate their values, adapt to the new reality, underlined by pandemic and also react to the demand of customers.”

Giorgiana Notarbartolo, a London-based impact investor and entrepreneur, said she could also confirm an increase in impact allocation and commitment in her experience.

“I believe it was a natural evolution that has been accelerated by the Covid crisis,” Notarbartolo said.

Leon Fear (pictured left), second-generation director of UK-based international property investors Fear Group, said his family business has invested in reducing emissions within its organisation for some time, which includes where possible greener initiatives in construction and property development.

However, as with most new technology and innovations, delivering some of the reductions was costly, especially in the earlier stages, Fear said.

“Pushing prices up for customers, for example an individual householder buying a new home, isn’t palatable when there is already huge pressure on buyers with rising house prices so this ultimately impacts the bottom line until technologies become more widely adopted, and accepted by consumers.”

Paul and Wes Karger, co-founders of TwinFocus, a Boston-based multi family office, said they too have seen an increase in interest and have heard of similar interest from other firms.

“While not all families share this sentiment, interestingly it appears to be more cross-generational—not just a millennial thing as one would think,” the brothers said.

“The reason is the people want their investments to have meaning and to express their personal values, in addition to earning a competitive market-based return.”