Sand: Frequently today those properties will be LEED certified, which is a sustainability rating system for the real estate industry. They may have gardens on the roof, or tenant services in the form of job training or child care, which makes them more integrated into the functioning neighborhoods where they are located.
The economics may not be the same as other properties, but into Jessica’s database we’re putting the affordability, the number of units, the economics of the census track where it’s located and other positive impact-related factors like solar on the roof. There is a range of value-adds that we now see with increasing frequency, and we like them.
Ellis: David, please talk about how CCM integrates the program goals and mission alignment requirements of institutional shareholders into their fixed income portfolios.
Sand: This has been the most rapidly changing part of our business in the last two years. Foundations like the Kellogg Foundation and the Heron Foundation were innovators in getting into the core of their endowment with mission related investing. There are now two additional categories of entrants into the impact investing field. One group is entering from a risk avoidance perspective, so fixed income with high credit quality is a toe in the water approach.
At the opposite end of the spectrum are institutions who got into impact investing through private equity in Africa or clean tech venture capital. Today, they want to be impact investors across all asset classes, including fixed income which they may not have paid attention to before. It’s like they are coming to us from two different directions and meeting in the middle, but their engagement is often based on an investment consultant’s recommendation.
Ellis: So fixed income impact investing is not as mainstream in the U.S. as it is in Europe at this time.
Sand: I totally agree with that.
Ellis: Jessica, what about people in your generation who are engaged in their family’s office or high-net-worth asset management program?
Botelho: The participation of more millennials in the impact investing field will help the U.S. catch up with Europe. One of our clients, the Cordes Foundation, focuses on impact investing that empowers women and girls and builds stronger communities. They are an excellent example of a millennial working within the family foundation.
Ron and Marty Cordes started the foundation and their daughter Stephanie is the vice chair. Impact metrics that align with the foundation’s mission are very important to them.
Ellis: When you are engaging with potential investors how do you focus on the value-added aspects of CCM’s portfolio?
Botelho: There are multiple positive, tangible aspects of the investments we make, and our clients want to hear about them and are excited about them. Our shareholders that are regulated financial institutions want to know about the innovative aspects of our community investments. Same for our non-bank shareholders. They look forward to seeing the many positive-based outcomes that are a result of the bonds we purchase and we are continually finding new ways to showcase them whether it’s through an annual impact report, video, webinar or client report. They know we can provide this level of transparency and data, so they want all the details.
To read other article in the series, click on the links below:
http://www.fa-mag.com/news/the-wise-woman-and-the-millennial-23738.html
http://www.fa-mag.com/news/millennials-leading-the-way-in-sustainable-investing-24019.html
http://www.fa-mag.com/news/millennials-mainstreaming-impact-investing-24487.html
/news/an-sri-collaboration-across-generations-and-genders-24873.html
/news/like-minded-people-with-purpose-and-passion-25457.html
/news/green-investing--all-in-the-family-26082.html
/news/sri-investing-well-positioned-for-growth-26394.html
/news/a-passion-for-healthy-living-and-sustainability-26918.html
/news/investing-with-a-personal-touch-27147.html
/news/investing-with-impact-27565.html
/news/making-a-positive-impact-27853.html
Paul Ellis founded Paul Ellis Consulting to work with financial advisors who want to integrate sustainable and impact investment strategies for their clients. David Sand is chief impact investment officer and chief investment strategist for Community Capital Management, and Jessica Botelho is director of shareholder relations.