What is impact investing? Why is it relevant to the current crisis?
Impact investing is about investing with the intention of generating positive societal impact alongside a financial return. It is often perceived as a ‘nice to have’, or something which is really only appropriate for the ‘responsibly minded’. However, as Covid-19 severely disrupts markets and society, priorities are being reset, and viewpoints reframed, out of sheer necessity. This shift in focus could see impact investing move into the mainstream, as a world in lockdown focuses on the problems we are facing, and the need to find solutions.
Where can impact investing make a difference?
The social and human costs of the pandemic have made it obvious that more resources must be deployed in many areas targeted by the Sustainable Development Goals (SDGs) as a matter of urgency, not least of which is SDG 3, Good Health and Wellbeing.
This is where we believe impact investing can really make a difference, supporting companies who have at their core the intention to make a positive impact on society and the environment. This is not to say that these are philanthropic organisations – on the contrary, they will be judged on their ability to produce financial returns, aligned with the positive impact they are producing. At times like these, many of them will display a more inclusive version of capitalism by putting in place special measures to support their employees, their customers and the wider community.
Can you give an example of a company which has gone the extra mile?
On the healthcare side, at the time of writing (20 April 2020), US diagnostics leader Quest has managed to perform more than 940,000 Covid-19 tests since 9 March. Over that short period, it has grown its testing capacity from 10,000 to 50,000 a day, with testing performed across 12 different sites. And solutions are not just confined to healthcare. Another of the fund’s holdings, recycled packaging specialist DS Smith, has collaborated with food retailers across Europe to design and produce emergency provision or essential boxes that can be delivered to the doorsteps of the most vulnerable.
What happens in a post Covid-19 world? Do we go back to our old ways?
Hopefully not. The immediate effects of this pandemic are horrifying, from a human as well as an economic point of view. But there might be a silver lining to the crisis, as we are reminded of the importance of a well-functioning healthcare system. Moreover, climate change, pollution and inequality will sadly still be with us on the other side of Covid-19. We hope that governments and industries will step up their efforts to find solutions to our all too obvious societal challenges, and we are convinced that the commitment of impactful companies to combat them will remain firmly in place.
About Véronique Chapplow, ESG & Impact Investment Director, M&G Investments
Prior to joining M&G, Véronique worked as product specialist at Zadig Asset Management for two years and Deutsche Bank for six years, servicing institutional equity clients specialised in the insurance sector. Before this, she worked at GAM, initially in the capacity of equity analyst before becoming deputy fund manager of GAM’s European Equity Funds. Véronique started her career at NatWest Securities as equity analyst covering the oil and gas sector. She is an Associate member of the Institute of Management and Research, the precursor of the CFA Institute. Véronique graduated from French business school EPSCI and obtained an MBA from Heriot Watt University.