Plum Lomax, Anoushka Kenley, Abigail Rotheroe and Sarah Denselow, April 2018
NPC for KL Felicitas Foundation, Sonen Capital
ABOUT THIS REPORT
Impact investing—investment whose goals are simultaneously and measurably both social and financial, aiming for private return as well as public good—is now a very significant asset pool. By some estimates,* in 2016, over $10 trillion of global assets were using sustainable strategies—including environmental, social, and corporate governance (ESG) factors, impact and community investing, and sustainably themed investing.
Even more significant is the rate at which sustainable investment is growing—up 41% from 2014.* As interest from individuals, institutions, and foundations gathers pace, so too has the involvement of global blue chip financial institutions, normally best known for a relentless focus on the single bottom line of pure financial return: BlackRock, UBS, Goldman Sachs, Bain Capital, and TPG are just a few of the institutions that now offer impact investment solutions to their clients.
If we are to ensure that this growing pool of assets has measurable and relevant impact—and as a result is able to continue to attract further flows of capital—then it is vital, now more than ever, that we do our very best to assess the social and environmental outcomes of those investments and get a handle on the likely impact of that capital. These efforts need to be transparently measured and widely reported. Without such transparency, the risk is that impact falls short of expectations, investors are disappointed, and the field fails to grow, loses momentum, or worse. Fund managers such those illustrated in the report—that are setting the pace in demonstrating impact—are to be applauded.
Charly and Lisa Kleissner are an important part of this growing movement. Through their KL Felicitas Foundation (KLF), managed by Sonen Capital, they now have over 13 years of experience in investing their $10m of foundation assets for impact. From day one, transparency—both on the financial returns and the social and environmental impact achieved by their investments—has been paramount. Learning from, and sharing, their failures as well as their achievements matters to them deeply; their mission is to transform the global financial system so that, one day, every investment made by any individual or institution accounts for its social and environmental impact—positive or negative. They see their role as challengers of traditional investment approaches, encouraging and enabling investors by building evidence, creating powerful tools, and co-creating support networks.
This review of KLF’s social impact, combined with eleven years of financial performance data of their portfolio, is just one element in achieving their mission. To respond to the increasing demand for open datasets on impact-investing portfolios, the Kleissners have devoted significant time and resources to the Toniic Institute’s T100 project—a multi-year study aggregating 76 impact investment portfolios (representing over $3.5bn of assets)—so that others can understand the intentions, impact, and financial risk and returns of impact investors.
NPC is delighted to have been KLF’s impact partner for almost three years. We work together, along with its investment manager, Sonen Capital, to understand the impact of KLF’s investments. Our work has shed light on two fundamental lessons:
- Despite challenges for investors and investees, it is possible to measure the outcomes of a wide spectrum
of investments across different asset classes and impact categories.
- Impact (of varying degrees) can be achieved while gaining a financial return (of varying levels).