When did Rockefeller & Co first become involved in sustainability and impact investing?

Rockefeller & Co has a long tradition of impact investing, having pursued investment goals incorporating the Rockefeller family heritage of public service and philanthropic endeavors, and having a history which traces back to John D Rockefeller’s founding of his family office in 1882.  The company was an early pioneer in sustainability and impact investing, formally launching a program and investment strategy for Rockefeller family members in the early 1970s, and since 1980 offering that strategy to a broader clientele of institutions and other families.

How has impact investing evolved over the past decade?

Traditionally, impact investing has been associated with social entrepreneurship and has found a venue in asset classes such as venture capital and private equity investments. As the capacity and participation in responsible investing grew, organizations developed to foster collaboration and to further engage investors on sustainability and impact investing. Rockefeller & Co has been an active participant in many of these organizations and initiatives over the years.

The United Nations-supported Principles for Responsible Investment and the Global Impact Investing Network are two organizations that are making an impact in this space.  The PRI was founded on a set of responsible investment principles by an international network of investors to collaborate on the development and implementation of a more sustainable global financial platform. As a testament to the rapid growth of responsible investing activities, the PRI has expanded from a group of 21 asset owners with $2 trillion in assets under management in 2006 to some 1,200 signatories today, with approximately $34 trillion in assets under management. 

The GIIN was launched in 2009 as a non-profit organization dedicated to increasing the scale and effectiveness of impact investing globally in private markets. It supports those entities that want to participate in impact investing, and are focused on research and information to make investment decisions that seek to generate measurable social and environmental impact alongside a financial return.

Today, both of these global investor initiatives engage in the discussion of impact investments in public equities, and recognize the transformation that large companies have the potential to make on key social and environmental issues.

How does Rockefeller & Co approach impact investing?

The Sustainability and Impact Investment team at Rockefeller & Co believes that public equities are one of the most effective means of pursuing impact investing and seeking positive outcome. A cornerstone of our assessment process is the integration of several key social and environmental factors into investment decisions. We evaluate the business models of companies and the risks they present to the environment and society, as well as how these companies mitigate such risks and create sustainable opportunities through their products and services.

We use sustainable investment metrics that focus on best practices and measure the progress of corporate governance and management quality, environmental stewardship, community impact, human rights and workplace issues in operations and the supply chain. These factors are examined alongside a company’s financial performance and business strategy.  Additionally, Rockefeller & Co continues its environmental, social and governance advocacy role by participating in proxy voting and shareholder dialogues.  

What are some of the common misperceptions of impact investing?

Impact investing is based on the concept of investing capital with the mission of creating positive social and environmental impact.  We believe that one of the most common misunderstandings about sustainability and impact investing arises from the notion that managing environmental and social risks or taking advantage of sustainability-related opportunities requires sacrificing profitability. 

However, several academic studies suggest otherwise, in demonstrating that businesses with strong sustainability practices can perform as well or better than the market.  Similarly, we believe that asset managers with sustainability and impact portfolios who have invested in those companies have the potential to match or exceed the performance of the wider market over the long-term.

For example, when companies invest in programs that create safer, healthier and environmentally sustainable workplaces, they can improve employees’ productivity and increase their competitive advantage, which has the potential to positively impact financial returns and sustainability. Programs that reduce environmental footprint – such as through a reduction in energy use or water conservation – can add value to businesses in the long run. Another angle of impact investing involves seeking companies that pursue optimization and the establishment of efficiencies in business activities, which tends to generate savings in the elimination of wasteful processes.

Impact investors also recognize that integrating sustainability principles in business operations can help to avoid or mitigate losses. As a case in point, impact investors believe that employing social and environmental risk management strategies can reduce the potential for costly litigation, business disruption, and reputational damage. Here at Rockefeller & Co, the financial prospects of our investments are analyzed alongside the sustainability characteristics of the business, with the aim of generating positive return on investment in tandem with positive social and environmental impacts on the ground.

Where do you see impact investing headed?

Sustainability and impact investing is built around a set of core principles, but it must also remain open and responsive to new global developments.  Emerging issues in sustainable investment include carbon asset risk management and building climate resilience in business strategies, privacy and data security, disclosure of corporate political spending, and human rights practices in the supply chain.  In these areas and a range of others, impact investing has the potential to bring together investors, asset owners, asset managers, foundations, family offices, governments, corporations, non-governmental organizations, interest groups, and local communities to meet common ends.  There has been noticeable growth in the support of impact investing in recent years, as it broadens to encompass different asset classes and attract new actors – including private investors, pension funds, foundations, and endowments.

So to sum it up, what is the “value add” that Rockefeller & Co brings to the impact investing space?

We believe that clients value Rockefeller’s long-term, disciplined focus on the issues related to impact investing. Our clients likewise appreciate our ability to screen companies on a fundamental economic level, in addition to the consideration we give to measures of sustainability.

The above commentary is provided for informational purposes only and is not intended, and should not be construed, as investment or other professional advice.  It does not purport to be a complete statement of approaches, which may vary due to individual factors and circumstances.  Although the information provided is carefully reviewed, Rockefeller & Co cannot be held responsible for any direct or incidental loss resulting from applying any of the information noted.  Past performance is no guarantee of future results and no investment strategy can guarantee profit or protection against losses.