For some of these business models, the profits rise in tandem with the social benefits supplied. An Environmental, Social, and Governance (ESG) analysis can help us define firms which make positive social impacts. But a firm founded with a social impact as its business model can lead investors to a new frontier.
With any new product or business model, there may be a ‘First Mover’ advantage. As for those who follow in later waves, why were they not early into the market? Often because they did not yet have the expertise. Businesses in which financial and social success are intrinsically intertwined are new concept. Most of these are small firms, and not yet public.
At Candriam, we think whether social or environmental, one way to be a First Mover into Impact businesses is to partner with the rare specialists who have the experience. Many of these specialists focus on one or a small number of industry sub-sectors, because they need to supply not just financing, but significant guidance and managerial support. We think a Fund- of-Funds approach offers access to these first mover experts, along with a degree of sector diversification.
Want to meet some experts from this new frontier in which accounting systems measure not just financial results, but also impact? Candriam’s Impact One fund of funds is invested in funds managed by the two private equity impact managers we interview below.
We share our conversations with these two Impact Fund managers and a successful ‘graduate’ company. To give you a broad understanding, one manager has been in the area for a number of years, with a social focus on job creation. The other is a more recent entrant, whose focus on carbon reduction has led to the creation of new manufacturing jobs. Please read the conversations by clicking on the link.
https://www.candriam.com/siteassets/campagne/impact/2022_04_impact_itw_short_en_web.pdf
