We talk to a new UK-based organisation that is delivering a new level of risk management, control and approach to how individuals and wealth managers steer funds to not-for-profit organisations wrestling with issues such as climate change.
With all the controversy around “greenwashing” of investments, it is easy to grasp that some of this misleading conduct is driven by firms desperate to square hard financial results with doing good for the planet and other causes.
While debate remains on whether ESG investing beats the traditional sort over the long term, or involves a trade-off, maybe one approach could be to allocate money to projects that don’t claim to make a profit in the first place. At the same time, there’s no reason why not-for-profit projects should not run with the same rigour, high-calibre client reporting and risk management as the most hard-nosed investment portfolio.
This is the approach of the Global Returns Project, which is a UK-registered charity, launched in 2020, helping investors to tackle climate change. In late December it partnered with GrowthInvest, the independent technology platform that simplifies alternative investments for advisors and their clients in the tax-efficient investment space. Under the arrangement, GrowthInvest introduces GRP’s portfolio of not-for-profits to their network of advisors and fund managers.
“We are trying to apply all the things we have learned about investing to the world of not-for-profit. We know that diversification is important and research and curation [of investment] is important, and that reporting of performance is critical,” Jack Chellman, chief project officer at GRP, told this news service.
The project is about helping wealth managers to respond to concerns about climate change. The challenge is that there is no direct investment project available for regenerating the planet, the organisation says.
For example, protecting marine ecosystems or forests does not necessarily generate a profit. Instead, it makes more sense for those interested in these ideas to steer money to a portfolio of non-profits that have been selected and scrutinised – which is where GRP says it comes in.
“It is about asking people to contribute a slice of a portfolio a year,” Chellman said. “We want this to be a normal part of a portfolio and asset allocation process.”
Chellman said that GRP’s activities should not be conflated with ESG or impact investing because there is no presumption at the outset that the money devoted to these areas will yield a financial return.
GRP has a team of climate scientists on its tech advisory board to help with monitoring the performance and other features of work centred on the environment, for example.
The firm is working with the wealth and asset management industry to engage firms. It intends to be a global business. Already, GRP works with groups on the wealth and advisory side such as Leading Edge Wealth Planning, Nvirovest (a soon-to-be-launched impact investing app), Pangea Impact Investments, Path Financial, Southam Financial Planning, Sarus Select Capital, TT International Investment platforms, and the aforementioned GrowthInvest.
Chellman said that GRP does not advise clients, nor is its “Global Returns Portfolio” a regulated financial product, but a collection of not-for-profits to which individuals or institutions can donate. Its standard practice is to split all donations equally among the six constituent organisations within the portfolio. GRP takes no deductions from contributions to the portfolio.
Many individual contributors to the portfolio start with a donation of about 0.25 per cent of their savings and investments annually. As of the organisation’s year end in March 2022, it had raised more than £250,000 ($303,533) for portfolio constituents.
At present, most existing contributors to the portfolio are based in the UK, but eventually the model can go global, Chellman added.