Impact Shares is getting ready to move into a fifth area of social concern after already having launched four ETFs that are directed at applying capital to social issues.
The firm, a 501(3)(c) non-profit financial firm, is filing with the Securities and Exchange Commission to create an ETF that brings capital to bear on the problem of climate volatility and climate change, according to Ethan Powell, founder and CEO of Impact Shares, a financial services firm and ETF provider based in Dallas.
Powell said in an interview that his firm considers both private and public entities and individuals to have a responsibility to make positive changes in the world through investments. The firm partners with nonprofit organizations to further the causes it believes in and gives the profits to these organizations.
“Corporate leaders are more aware today that they have a responsibility to create positive change,” or they bear the brunt of shrinking finances as investors lose confidence in them, Powell said. Technology is making corporate operations more transparent and making it easier to show when they are doing a good or poor job on social issues, he added.
Powell recently participated in discussions held as part of Climate Week held in New York City earlier this month. Climate Week NYC has been held annually since 2009 in conjunction with a meeting of the United Nations General Assembly and brings together international leaders from business, government and civil society to showcase global climate action. It is sponsored by The Climate Group, a non-profit organization that works with businesses and government leaders globally to address climate change.
The ETF that Impact Shares is seeking regulatory approval for will address world catastrophes that are caused by climate change.
“There needs to be a better realization of the true cost of climate change,” Powell said. With the new ETF that is being developed, Impact Shares is reaching into areas it did not reach on its first offerings. The ETF will have a positive impact on long-term trends that are particularly important to younger people, Powell said.
“A question investors should be asking is: How intentional do they want their capital to be relative to other, non-pecuniary interests?” Powell said. “The research and anecdotal evidence supports the fact that if implemented appropriately, you can be intentional with environmental and social outcomes while not conceding risk or return.”
Impact Shares does the research to determine how investments fit into each ETF. “The advisors and B-Ds do not always have the time or background to reconcile their clients’ desires with their investments," he said. Money is a main motivating factor behind social change, so each investment dollar matters. “We want people to understand our theory of change."
According to the Impact Shares website, “Being a part of our ETFs means committing to an evolving set of criteria, defined by our non-profit partners, to ensure ongoing alignment of corporate behaviors with social values. With all net profits going directly back to these non-profit partners, [we are] creating an impact that is both reflected in portfolios and felt in the world all around us.”