Activist Investment Funds for Climate Change? I want to leverage my retirement money to also push positive changes in the world while at least maintaining the principal.
I have been donating a portion of my income to various charities, but it occurs to me that I am not fully leveraging my money to create positive change. I have struggled to find investment funds that actually pay a dividend and use their money for good. I found Domini Impact Fund which buys up equity in companies that meet their standards to promoting low carbon and social responsibility, but I feel like they are not maximizing the leverage of their capital. Is there a fund that better leverages their capital to create positive change? There must be a fund out there that uses it’s money to give low interest loans to high impact programs that otherwise wouldn’t get off the ground or provides loans with incentives for incorporating sustainable practices? Any ideas?
Hello Maxwell, we at Giving Green have recently begun tackling this issue, from a couple of angles. We have two reports, one on ESG Funds and Climate Impact and one on Impact Investing for Climate. The ESG report covers more passive strategies like index funds (mostly public equity portfolios), while the impact investing report is more about active, riskier strategies to help pro-climate businesses get capital.
Overall, there weren’t totally clear conclusions. On ESG, We’re relatively skeptical of the classic “divest from bad stuff” approach of most ESG funds. As you noted, some funds use shareholder proposals and proxy voting to push an agenda, and we indeed think this is more promising. We list some options in the report.
Impact investing is harder, especially if you are a retail investor without a lot of capital behind you. Basically there are few entry points, but the market is changing rapidly and hopefully there will be more options soon. I agree with jackva that PRIME is a great option, but it’s most easily accessible through a DAF, meaning you are playing with philanthropic capital. If you want to make an equity investment that has a chance at a return, minimum is 250k. I believe they have some bond/note type options with a 50k minimum. We list some other options in the report, but there’s no slam dunk.
We plan to keep working on this workstream, and plan to publish more reports and recommendations in 2022.
I should say, Domini Impact Fund also uses shareholder proposals and proxy voting to try to push their sustainability agenda, but I’m not sure how affective that is.
You could look at PRIME Impact Fund which looks like the best option in this space.