Why did you decide to engage with IFB?
It’s actually a logical step. As an asset manager, I have always been convinced that pursuing financial returns — in line with the objectives set by the client — can go hand in hand with making a positive contribution to society. This, without sacrificing returns — quite the contrary. If I may say so, “it’s not sustainable to underperform.”
There is also something I often refer to as a “double alpha.” In the financial world, alpha stands for achieving excess returns. By double alpha, I mean that both a financial and a societal return can be achieved.
You were the CEO of a private bank and an asset manager. In your view, what is the responsibility of wealthy individuals and asset managers in our country when it comes to creating the kind of positive impact that IFB promotes?
Every individual and every organisation has their own goals and objectives. Yet there is a clear need to mobilise both private and institutional savings for socially relevant investments.
These investments can take many forms — from infrastructure to food and climate technologies, to projects with socio-economic impact. What is crucial, however, is that a financial return is still targeted, depending on the level of risk an investor is willing to take.
That expected financial result is essential: it ensures credibility in the eyes of the wider community, and it creates value. If that element is missing, one moves into the realm of philanthropy, which is also relevant, but driven by different, noble motives.
What roles should the government and large financial players respectively play in achieving IFB’s mission — namely, making impact a criterion alongside risk and return in every financial decision?
We could actually expand the efficient portfolio theory — which traditionally balances risk and return — into a three-dimensional framework that considers risk, return, and impact as three vectors.
Coming back to your question, it’s clear that the government cannot do it alone, simply because of the imbalance between available and required resources. The private sector must step in.
The government, however, can create an enabling framework — not a “tick-box” one, but for instance one where the cost of capital made available for impact investments is lower for the investor. Another important aspect is that overly stringent or burdensome regulations — think of excessive reporting requirements — can have the opposite, even discouraging, effect on initiators or investors.
We can also observe that so-called asset owners — such as pension funds — show strong interest in impact investments internationally. These investments fit perfectly with their long-term objectives, once again without compromising returns. After all, they must ensure that pensions are guaranteed through economic cycles and remain value-preserving.
