What is purpose-driven investing and how can we start to embrace it?

Nine in 10 investors want their investments to align with their values according to a recent survey published by Swiss investment bank UBS. I like to refer to this as a movement towards purpose-driven investing.

UBS conducted the survey in May year among 3,800 investors 25 and older with at least $1 million in investable assets split across 15 global markets. Researchers compared the findings with those from a study conducted in May 2020 with a similar sample.

Seventy-nine percent of respondents in the new survey said the pandemic had prompted them to reassess what was important. Half planned to increase their charitable giving. Nearly 60% reported being more interested in sustainable investing than they were before the outbreak.

Uncovering the purpose behind your investments

There are many loose terms like ethical investing, sustainable, socially responsible etc. The definitions are still being formed. But what’s clear is that many investors are now starting to consider the “why” behind their business, career and investment decisions.

This week I learnt that two amazing businesses — Rolex and Bose — are somewhat social enterprises in that their ownership and profits are paid back into the community. Rolex is owned by the Hans Wilsdorf Foundation.

In 2015, the foundation saved the Servette FC, Geneva's football club, from bankruptcy. It financed, and managed the design and execution of, a spectacular bridge on Geneva's Arve river, and had it named the Hans Wilsdorf bridge.

In 2017, it offered 100 out of the 114 millions needed for the HEAD, Geneva's applied arts school, to acquire a brand new and very large in-town campus. One of the latest actions was to buy out a famous downtown Geneva building which was scheduled to be torn down. It harboured a cinema theater that had been deemed unsalvageable so far.

The majority owner of Bose Corporation (known for making amazing audio products) is the Massachusetts Institute of Technology (MIT), donated to MIT by the founder Amar Bose himself, which receives cash dividends through the non-voting shares donated by the founder in 2011.

According to the company annual report in the 2019 financial year, Bose Corporation received revenue of US$4.0 billion and employed more than 9,000 people.

Both profits from Rolex and Bose are used to help society overall, as opposed to making CEOs and institutional investors richer.

Knowing why helps determining what and how

My personal business, career and investment goals are driven by my desire to support and provide from my young family. Taking this further, it’s not even the returns or the money that matters. It’s the confidence that my family can have, growing up and knowing that hard work, strategic thinking and resilience are all important in building confidence and living a happy life. That’s the ultimate goal.

I try my best to take my family along the investment journey. When assessing real estate deals, I ask my 10 year old daughter what she thinks. I get her to send emails to agents, to review brochures. I even made a pact with her earlier this year that she can only get her allowance in cryptocurrency if she sets up her own digital wallet and tells me which token she prefers to receive in.

When my investment purpose is clear, my what and how become even clearer. It’s all very well to want a 10% return pa or $10m to retire on, but when you know why you need the 10% or $10m and how it will improve your life, it becomes a lot clearer on how and what to invest in.

Something to think about

One of the things we’ve been thinking about at Wealthi this week has been on why we love real estate investing and how our investment goals help make life better. There’s no clear answer here, my purpose this week is to open the conversation around purpose-driven investing and the options that come with it.

Many investment managers have already launched products which develop strategies around certain environmental, social and governance topics. Some of the world’s biggest investors are moving away from fossil fuels in a major way, just one example of how quickly things are changing.

The world’s largest hedge fund, Bridgewater Associates and the world’s largest fund manager, Blackrock, have publicly declared sustainable investing is the future.

Australian Ethical Australian Shares fund recently took out the Fund Manager of the year award for 2021 not only because of its “feel good” status but because of its investment returns.

The judges said the Australian Ethical Australian Shares fund delivered a thoughtfully considered and deeply researched true-to-label ethical approach to investing.