By John Stroud, full bio below
Mention the United Nations to a group of financial advisors and it’s unlikely to inspire visions of investment potential. But significant opportunity is exactly what a growing cadre of capital providers – from pension fund and endowment managers, to family office advisors and Ultra High Net Worth impact investors – are seeing in the UN Sustainable Development Goals (SDGs).
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The following is our rough coverage of the 2021 Sohn Investment Conference, which is being held virtually and features Brad Gerstner, Bill Gurley, Octahedron's Ram Parameswaran, Glenernie's Andrew Nunneley, and Lux's Josh Wolfe. Q1 2021 hedge fund letters, conferences and more Keep checking back as we will be updating this post as the conference goes Read More
A set of ambitious targets designed to tackle poverty, climate change and social inequality, the SDGs have drawn considerable attention as impact investing moves from the margins to the mainstream. To highlight the potential value they represent, Jose Meijer, Vice Chair of the large Dutch pension fund ABP called the SDG’s “a gift from the UN to the world”.
The environmental and social good these initiatives will inevitably catalyze is laudable. But equally important to savvy impact investors, the commensurate flow of capital into these industries creates a rising-tide environment in which to participate.
This article will outline the potential this sector holds for investors as well as a fully vetted and turn-key strategy in which to participate in its growth through public equities.
In September 2015, the 193 member states of the United Nations unanimously adopted the Sustainable Development Goals, a global agenda to address areas of critical importance for humanity and the planet, and to transform the world by 2030.
The SDGs comprise 17 audacious yet achievable social and environmental initiatives, including affordable and clean energy, decent work and economic growth, good health and well-being, and responsible consumption and production, among others.
The UN estimates the cost of achieving these SDGs to be anywhere from $5 Trillion to $7 Trillion per year. This level of spending presents a huge market opportunity for investors and the financial services industry is responding in kind.
Credit Suisse has made strategic investments in nearly every SDG, while PGGM, a Dutch pension fund manager with more than $225 billion in responsible investments, is aligning its four impact investing lines of business with six of the Sustainable Development Goals, according to Institutional Investor.
PIMCO notes that “using the SDGs as a framework for impact investing has the potential to unlock the multi-trillion-dollar universe of core fixed income for the purpose of change.” UBS and Blackrock have also launched strategies that are aligned with the SDGs.
What these financial institutions have concluded is that innovative companies that can play a strategic part in meeting these global needs will be able to identify attractive growth opportunities and harness the ability to increase long-term shareholder value.
The million-dollar question now becomes how to identify these companies and, perhaps more challenging, how to effectively and efficiently place them in your portfolio?
A Washington, DC-based company called SerenityShares has made participating in this sector easy through an exchange traded fund (ETF) with the symbol ICAN. Serenity created a passive, rules-based methodology to target US-listed companies whose products and services address the critical needs of the UN’s SDG’s.
The result is a single-fund solution that provides investors of any financial level an opportunity to make a positive impact on the world’s environmental, social and governance needs while pursuing an attractive, financial return.
Said simply, retail and institutional investors now have the ability to own a diversified, liquid, and dividend-issuing portfolio that directly participates in solving the SDG’s. All with the same ease as purchasing a single stock.
Impact Investing is gaining immense popularity as investors realize they do not have to sacrifice long term profits to produce environmental and social good. Investment vehicles like this ETF will help ensure that everyone can be involved in solving our world’s most pressing problems.
John Stroud is co-founder and Managing Partner of NRJ Capital.
A former senior executive at Greenworks Lending and Lehman
Brothers, he maintains a particular expertise in optimizing the financial performance of income-generating assets.
John advises institutional and high net worth private clients on identifying, vetting and incorporating impact and mission-related investments into their broader portfolios.
His work has included the hands-on creation of demand-side efficiencies as well as on-site clean energy generation in the building industry with specific emphasis on commercial, industrial and multi-family properties.
John has spoken extensively to the built and investment communities on the benefits of incorporating environmental and social metrics into broader, strategic decision-making .
He received his undergrad degree from James Madison University, his MBA from The McDonough School of Business and has completed post-graduate work in sustainability at Harvard Business School.