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When Money Reflects Conscience – A Push for Impact Investing 

State Street

September 06,2018

We all need money to pay for basic goods and services — food, clothing and a roof over our heads

But at an emotional level, money becomes more than just a way to pay for the things we need; it becomes an extension of who we are as people. For those in a position to have them, individual investments are more than just financial safety nets; they are a manifestation of personal values. Money lets us provide for our families, pay for education, and retire with dignity. It’s a monetary version of Maslow's hierarchy of needs — fundamental needs at the bottom and self-actualization at the top.

So when the time comes to take care of their higher needs, individual investors are looking to impact investing. Not everyone has millions of dollars to work with, but even a few thousand dollars can be used to take a stand and be a force for good.

Building Impact Housing

The lack of affordable housing is reaching crisis level in the US. About 11 million families — or about a quarter of all renters — spend more than half of their incomes on housing. The federal low-income housing tax credit, created in 1986, allows companies to reduce their tax liabilities by investing in affordable housing, producing roughly three million rental units in the last 22 years, but millions of households are barely surviving on this side of homelessness. Back in 2012, the New York Times reported that “Over the last two decades…private landlords have removed more than 200,000 apartments from subsidy programs so that they could raise rents. And, faced with weak federal support and no money for repairs, the local housing authorities that manage federally supported developments have boarded up or torn down more than 150,000 units.” There simply aren’t enough homes at affordable prices.

"We look at capital and see the opportunity for people and firms to use it to express their opinions and conscience. "

Eddie Lorin, a 30-year multifamily real estate veteran and founder of knows firsthand just how important a home is. In his career, he’s overseen the transfer of 40,000 units to the affordable housing market. “I saw the opportunity to transform lives by making right-sized improvements to help people live a good life. A clean, safe, affordable place to live is so important.” Major real estate investment projects don’t come cheap, and are often out of the realm of possibilities for most individual investors. And yet, Eddie created a model where someone could come in for $1,000 and become part of a project that “changes the world, one apartment at a time.”

Stopping Climate Change

Ryan Dings, chief operating officer at clean energy investment firm Sunwealth, believes there is a better way to do things when it comes to investing. “I’m grateful we live in a well-regulated economy with a myriad of investment options, but do those investment options reflect your personal values?” Impact investing is a way to provide value, in the form of a financial return, while supporting one’s personal values. For Sunwealth, combating climate change is the number one moral imperative, with the end goal being to simplify and democratize impact investing. “It’s just a matter of will and capital. We look at capital and see the opportunity for people and firms to use it to express their opinions and conscience.”

Dan Smith, another State Street employee, is one of Sunwealth’s investors. He’d been trying to invest in community solar projects for a number of years but for one reason or another, projects always seemed to fall apart at the last minute. So, Dan decided to invest in one of Sunwealth’s commercial solar projects. “In the past, I’ve put money into carbon offset funds, but you don’t know where it’s going. You never get a warm and fuzzy feeling. I would rather do something that was a little more tangible and closer to home. I can drive by a project and see the solar panels I funded cranking out electricity.” Just like Sunwealth, Dan believes that climate change is the biggest challenge facing our world right now. So he wants his investments doing what they can to provide him a return, support his local community (energy is often sold back to local housing projects at a discounted rate for lower-income families) and save the planet.

Whether it’s pushing for gender parity, guaranteeing clean drinking water around the world or ending child labor, individual investors are choosing to put their money where their values are. It’s not just about making a return; it’s about doing good with their money. And while every individual’s 401k or personal investment portfolio might not be worth millions, as more and more people put what they do have toward impact investing, the more things can change for the better.

Important Information

Investing involves risk including the risk of loss of principal.

The information provided does not constitute investment advice and it should not be relied on as such.

This document may contain certain statements deemed to be forward-looking statements. Please note that any such statements are not guarantees of any future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.



Topics: ESG

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