When choosing where to invest, the market has many quantitative approaches to selecting investments. But defining what is socially responsible is not as easy to determine. Investing with impact is a platform that focuses and filters potential investments to result in value aligned returns.
Impact investments -also known as: mission-aligned investing, social impact, value alignment, sustainable investing- aim to solve social or environmental challenges while generating a return for the cause and the investor, contributing to a more sustainable world.
Returns from investing in socially responsible platforms not only offer a return on investment, but satisfaction that one can truly make a difference. Take for example Morgan Stanley providing a larger platform for their clients. It is not easy to blaze a trail, but Morgan Stanley has made a commitment that other firms should embrace.
Hilary Irby, Executive Director and Head of the Morgan Stanley Investing with Impact Initiative participated in a Q&A for us from New York, on the challenges and opportunities with their initiative.
TS: How did you land in your current role at Morgan Stanley?
Irby: “I became interested in bringing together the multiple bottom lines at my previous firm. I started looking elsewhere and had the pleasure of meeting Audrey Choi head of Global Sustainable Finance, Morgan Stanley. They were implementing a plan to drive sustainability strategy for the firm. Based on my background and interests it was a really good fit and I joined a little over 3 years ago to help build up that strategy.”
TS: What type of background makes someone a good fit for your role in the Investing with Impact role?
Irby: “Some people underestimate impact investing and the skills required. A strong foundation in the fundamentals in finance and financial products, combined with the passion for impact. Someone who thinks more broadly then what their specific role is and how can they help advance the space, the role, and the firm.”
TS: How do you think about “impact investing” specifically at Morgan Stanley? What is “Investing with Impact,” and how did this approach evolve?
Irby: “We saw the impact investing space as an opportunity for the firm, an interesting space to grow in. We took a step back, broadened our thinking of where impact sits within the investment universe to make the space work for Morgan Stanley. We tried to develop an offering that would enable investors who have interests anywhere in that spectrum a broad base to choose from. There has been a tremendous amount done for a long time…our work has built off of what other institutions have done for decades. There are many different investment spaces, so we thought bringing it all together and offering it at Morgan Stanley to fit in the investing platform would be a great opportunity.”
TS: What are some of the challenges within the Investing with Impact Space?
Irby: “A few things. One, impact investing means so many different things to different people. Trying to get a base level understanding around what somebody means when they are talking about impact… to ensure you’re aligned in their way of thinking is a challenge on its own. Second, from a product perspective identifying high quality products that have an appropriate track record and that have the scale necessary for a firm like ours to be able to offer them to our clients. There are many products out there but it’s hard to build a track record, it happens with performance over time. Lastly, the impact world is a huge space, and finding the right space/place to focus our efforts is a challenge. While at the same time ensuring our advancement with what we are trying to do and meet the expectations with those that have strong knowledge of the space. The challenges in this space are definitely where the opportunities lie!”
TS: Tell us about the education piece of impact investing, on both the investors and advisor’s end?
Irby: “We feel there is a huge need in the continuing education on both sides and we think about it a lot. It can be tricky, mainly because it becomes relevant when investors and advisors become more interested in the education when there is immediate interest. And so finding the right way to start the education has not been clear cut and straightforward. So we are looking at various channels to do this, media, education programs, events, other types of research and materials, we do think it will take a very layered approach.”
TS: What can we expect from Morgan Stanley in the future around impact investing?
Irby: “We will continue to do work directly on a domestic front in community development, putting together innovative programs. We will develop the impact-investing platform to offer a broader range of investment opportunities for clients interested in the space. And we are looking at developing other products that have a positive social or environmental impact that can be offered to the institutional marketplace.”
Irby also offered up some advice to asset mangers and advisors: “Bringing recognition to the space, and demonstrating more broadly that there is interest is critically important to the keeping up with the demand. For asset managers out there thinking about creating products, recognize that there is a market opportunity to do so in the impact investing space. Stimulating the investors demand and recognizing that one does need to be cautious–think about investment in the space as any other investment.”
More from Hilary:
Learn more about Morgan Stanley Global Sustainable Finance here.
It’s important to remember that, when choosing where to invest, the market has numerous approaches to selecting investments. It’s often an arduous task to define what is socially responsible when investing; this is where impact investments are vital. They aim to solve social or environmental challenges while generating a return for the cause and the investor contributing to a more sustainable world.
Evanthia Destunis is a contributor to the Standard. Follow her on twitter: @edestunis