Mission-related investing (MRI) is gaining strong momentum
among non-profit institutional investors, with 31% making investments aligned
with environment and climate change, healthcare, housing, job creation, and
education, according to a survey by Cambridge Associates, a global investment
firm. None of the investors surveyed expect to decrease their allocations.
It’s no secret that public demand has been high for colleges
and universities to divest from fossil-fuel related investments, and the survey
found climate risk a top consideration for 41% of colleges and universities and
30% of foundations.
Most of their investment strategies involve negative
screens, but investors anticipate proactively seeking ESG and
environment/climate change opportunities in the future. Respondents said their
biggest challenges are lack of adequate mission-related investment options and
their own resource constraints.
“The good news for mission-related investors is that we’re
seeing a proliferation of ESG and impact investing strategies coming to market,
so this product supply problem is becoming less of a barrier to entry over
Matthews, managing director at Cambridge Associates and head of the
Investing Practice, said. The firm tracks 1,000 MRI funds.
The survey, fielded in 2016, included 159 non-profit
institutional investors of foundations, colleges and universities, religious
institutions and pensions from the United States, Italy, Japan, New Zealand,
Switzerland and the UK.
Of the respondents, 44% have increased their mission-related
allocations recently and 62% expect to grow it within five years.
It’s still early for investors to have solid performance
data to review, but in 2015, Cambridge worked with the Global Impact Investing
Network to study the financial performance outcomes for private equity and
venture capital funds with an impact lens. “That first report, issued in the
summer of 2015, did demonstrate that in many cases, impact investing funds had
performed in line with comparable benchmarks that we pulled from our own
database,” Matthews told CIO.
When it comes to measuring social impact from investments,
firms have different approaches. “Our view is that there is no
one-size-fits-all; we’re not going to come up with a score,” said Matthews, who
considers measuring impact part of due diligence. It’s “understanding the
impact the manager intends to have,” she said.