Impact Investing: a new form of engagement

Impact investing aims to address immense environmental and social challenges and contribute to the Sustainable Development Goals (SDGs) set by the UN. This is for La Financière de l’Échequier (LFDE) the new frontier of SRI: it is no longer just a question of understanding the ESG policies of companies, but of understanding their impact on the planet and society. A market for well-informed investors, the Place du Luxembourg is a mature industry that has established itself as one of the pillars of listed impact investing in Europe.

Listed impact investing seeks to generate both positive environmental and/or social impact and financial performance. If the intention to generate a positive impact is the starting point of any impact investment approach, additionality, i.e. the specific direct contribution of the investor allowing the invested company to Increasing the impact generated by its activities is also decisive. This is the extra soul provided by impact investing. Its measurability also increases transparency on the reality of the impact of clients’ investments. “We publish an impact report every year that transparently sets out our methodology and the impact of the investments made.3says Adrien Bommelaer, impact fund manager at LFDE. A major asset for investors.

“Initially stemming from the world of venture capital, impact investing is a vector of positive change”, specifies the manager. Investing in companies that place the search for positive impact at the heart of their strategy is, in our view, a lever for financial performance. We are convinced that ESG and impact investing will be two major performance levers in the future. ESG analysis provides a better understanding of the risks and opportunities of each stock and leads, by construction, to quality companies with solid balance sheets. The analysis of social policies or the supply chain, for example, makes it possible to better understand the risks inherent in each value. ESG work thus makes it possible to better understand the sustainability of financial performance.

Originally from the world of venture capital, impact investing is a vehicle for positive change

Adrien Bommelaer,&nbsp Manager,&nbsp La Financière de l’Échiquier

Impact investing makes it possible to identify long-term trends and investment opportunities related to the SDGs. LFDE has been a forerunner in this area with an Impact strategy backed by the SDGs since 2017, Echiquier Positive Impact Europe [1]. According to the UN, the opportunities created by the SDGs could reach $12 trillion by 2030. SDG 12 Responsible Consumption and Production represents a $2.4 trillion opportunity through building the circular economy and reduction of food waste. SDG 3 Good health and well-being could generate 2.8 billion through healthcare innovation, well-being or telemedicine.

Reducing negative externalities is another driver of positive change. Invest in a company like Novo Nordisk2which treats diabetes and has developed an effective anti-obesity drug, contributes to SDG 3. Investing in companies such as INFINEON [2]a manufacturer of chips for renewable energy plants and electric cars, contributes to SDG 7 Affordable and clean energy, and enables action against climate change.

LFDE’s impact funds are not just solution funds. Their proprietary methodology pushes the reasoning further. Unlike most funds dedicated to the energy transition, Checklist Climate Impact Europe1 also invests in pioneering companies with high climate maturity and ambitious climate or biodiversity commitments. These leaders are likely to generate a systemic impact on their ecosystem and lead the way towards best practices. The fund also invests in companies in transition that LFDE supports towards a more virtuous model. This is the case, for example, of the refiner NESTE2. A crucial category, because we cannot play a role in the climate transition without involving all the players in the economy.

Impact investing is a force of resilience and restores finance to its former glory, it is a new way of getting involved for investors.

Stephane Van Tilborg

Stéphane Van Tilborg,&nbsp Country Manager Benelux,&nbsp La Financière de l’Échiquier

“Impact investing is a force of resilience and gives finance its letters of nobility back, it’s a new way of getting involved for investors”, Stéphane Van Tilborg, Country manager Benelux at LFDE. It opens up new markets that are sources of value creation.

[1] The fund mentioned is mainly exposed to the risk of capital loss, to equity and discretionary management risks and to the risk associated with investing in small and mid-caps. [2] Stocks and sectors are given as an example. Their presence in the portfolio is not guaranteed. The investor’s attention is drawn to the fact that his investment in the fund does not generate a direct impact on the environment and society, but that the fund seeks to invest in companies that meet the precise criteria defined in the management strategy. [3] The investor’s attention is drawn to the fact that his investment in the fund does not generate a direct impact on the environment and society, but that the fund seeks to invest in companies that meet the precise criteria defined in the management strategy.

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