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general wealth structuring Nov 02, 2020

Impact investing is finally coming to Germany and Europe, after it existed for some time in the Anglo-Saxon world. The GIIN (Global Impact Investing Network) defines: “Impact Investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending on investors' strategic goals. The growing impact investment market provides capital to address the world’s most pressing challenges in sectors such as sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services including housing, healthcare, and education.”

Many investors follow the trend to ever more sustainable investments by way of a journey towards impact: The first step being negative screening (i.e. the exclusion of certain sectors like warfare or alcohol), the next being positive screening (i.e. investments made only in specifically chosen sectors and companies), then ESG integration (i.e. the integration of the E-Environmental, S-Social, G-Governance principles), finally culminating in the last step of actively following impact investing methods, possibly combined with shareholder activism to implement more sustainability in listed equities.

It is important to realize that impact investing is NOT an asset class of its own, but can be implemented across ALL asset classes in a holistic wealth portfolio. Practically, some investors start with - say - 10% of their wealth in impact, but others commit from the beginning to change all their assets into impactful assets over time. In contrast to philanthropic giving, the capital committed to impact investments is maintained and not used up, so that it can continue to „work“ for good causes. For wealth owners the SDGs (Sustainable Development Goals), as defined by the United Nations, provide a good framework for the kind of investments that may be targeted to reduce the funding gaps in the respective global problematic issues like climate change, reducing hunger or access to education on a global scale.

In the German-speaking countries, Europe at large and also in the Middle East, this subject is still relatively untapped and at least underdeveloped, if not totally intransparent. For the German-speaking world the main reasons might be the different structure and funding sources of the welfare state system or the lack of outspoken entrepreneurial families that are pushing the subject, apart from a few exceptions like the Mohn, Quandt or Klatten families, or few more outspoken individuals.

However, the German system remains in stark contrast to Anglo-America where donors like Gates, Zuckerberg or Dell are publicly very present. With the international growth, however, impact investing is also slowly but surely becoming mainstream in the German-speaking-region as financial institutions are pushing the case. But also movements and associations like the Federal (German) Initiative for Impact Investing (“Bundesinitiative Impact Investing”) are spreading the news further to include new and additional sources of funding, particularly approaching institutional investors, together with private family capital and family offices.

With the ongoing changes in the private wealth management sector, entrepreneurial families and wealth owners generally are increasingly setting up family offices or controlling their investment portfolio by themselves. This leads to an ever greater variety of investment approaches as more and more investors deviate from the standard asset management offerings of the past. The ESG integration investment solutions of the financial industry do not present a sufficient solution to channel capital into the right directions to make investments that improve the world both ecologically and socially. Many investors are increasingly disappointed about those ESG-related solutions and are looking for more. Impact investing thus becomes an increasing trend, spearheaded mostly by family offices and an ever increasing number of specialised institutional investors and asset managers. As now is the right time and possibly the final opportunity to make investments that can help saving the planet and our souls, impact investing is a growing trend also in Europe and the German- speaking countries.

To manage such new investment processes in a professional way, investors of all kind need more education and practice in following impact investing strategies to sustainably manage their holistic wealth across generations. Focused trainings will help the wealth-owner and the members of the next generation with the relevant know-how to make the right decisions either by themselves or, alternatively, to be in a position to better control the activities of their family office or other outsourced financial advisers. This is particularly true in the new and often slightly more challenging area of impact investing. The current offerings of the financial services industry are simply not enough.

Targeted, holistic and independent training - like the BeeWyzer Method - provides self-confidence vis-à-vis the financial services industry and puts the wealth-owner in charge of managing/controlling his wealth in a sustainable and impactful manner. Only if wealth owners know, which targets or SDGs they are supporting with their impact investments, can they demand efficient input from the industry. BeeWyzer responds to this market trend and offers holistic and independent online video training programmes for wealth-owners and NextGens globally, enabling them to follow individual sustainable and impact investing strategies, independent of the normal product offering by the financial services industry.





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