Total Portfolio Activation for Impact: A Strategy to Move Beyond ESG


Occupying space on the continuum between pure-profit investment, which seeks only to maximize financial returns, and philanthropy, where financial returns are largely ignored, impact investing endeavors to balance financial return with measurable social or environmental impact.

Impact-minded public market investors have traditionally used environmental, social, and governance (ESG) factors to measure sustainability and the positive contributions of the primarily public companies they invest in.

Today, many fund managers and asset owners want to move beyond ESG, but they struggle with how to manage risk and produce competitive returns. They have to thread their own way among the available investment options, putting together portfolios that, for instance, mix traditional investments with philanthropy, or that rely on researching and screening individual private companies for direct investment opportunities. These private companies that intentionally pursue positive social and environmental solutions operate in areas with the greatest need, which could be thousands of miles distant from where the investors are located, requiring an assumption of risk outside the comfort zone of the originating investor.

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