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Tuesday, November 10, 2015

Two major hurdles to the broader adoption of impact investing are being cleared by structural changes in the capital markets and new guidance issued by the Department of Labor that makes it easier for retirement plans to offer environmental, social and governance (ESG) solutions to investors planning for retirement.

In a new whitepaper published today, “Impact Investing: The Performance Realities,”Merrill Lynch analyzes these structural changes and the growing body of evidence showing that investors can do well financially by investing in organizations that are doing what’s right for the environment and society. The paper tracks key developments in the impact investing arena, pointing to rapid growth and innovation that are due largely to growing client demand over the past decade, as well as the improving quantity and quality of ESG data.

A recent Merrill Lynch client survey of 1,500 U.S. investors found that awareness and education about impact investing are also among the keys to its continuing growth.

“More of our clients want their portfolios to reflect their beliefs on issues such as social mobility, climate change, women’s rights and other key issues,” said Anna Snider, author of the paper and head of Global Equity and Impact Investing Due Diligence, Merrill Lynch Wealth Management. “Many investors have held back because of a commonly held belief that investing for a better world requires a trade-off in performance. We believe that a combination of more reliable data, enhanced portfolio construction techniques and innovation in structures and investment approaches will start to turn that outdated assumption on its head.”

“Impact Investing: The Performance Realities” assesses the real state of impact
In developing the whitepaper, Merrill Lynch analyzed proprietary, academic and industry data to gain insight into the impact investing landscape. Key findings include: