The new continuum

We often say that “philanthropy is biography” and this also stands true for investing. Both are inspired by what the investor cares about, how they want to influence the world they live in, and the legacy they want to leave for their own family and the world at large.

Investors are increasingly looking to align their investment portfolios with their preferences and interest in sustainability. They are wanting to utilize both investment and philanthropic strategies to contribute to, or even drive, improvement in measurable ways.

Two parallel tracks that interweave purpose, values and intention create an “impact continuum” of choices. While the continuum is a framework that illustrates the similarities across both investing and philanthropy, it is not meant as an either/or proposition. Each point on the continuum serves a specific purpose and one could end up with any combination. Incorporating a variety of both investment and philanthropic tools may help you achieve your goals more holistically and completely.

Why do families consider impact or sustainability in their giving and investing? The reasons vary and are often deeply personal.

Some have a personal connection to a specific theme, issue or geography. Others are hoping to create a legacy that will have a lasting positive impact. And others seek to embed themes that matter—to themselves, to people and planet, and to their portfolios—into how all their capital is deployed to minimize risks and maximize opportunities.

While motivations can differ, we believe considering both tracks of philanthropy and investing is appropriate for all investors who are interested in social or environmental topics.

For example, investors or philanthropists may want to finance innovative forms of renewable energy because they are interested in helping to address climate change. And early stage philanthropic, venture or growth equity financing can help additional technologies that support global decarbonization goals—creating positive ripple effects for everyone.

How can you think about which tools from your philanthropy and investing toolbox to utilize as you consider how to advance your passions, preferences and goals?
Here are three steps to get you started:

1. Articulate your preferences and objectives: To identify the causes that are most important to you and your family, the UN Sustainable Development Goals (SDGs) can provide a helpful starting point. Health, climate change and education are some of the top impact investing initiatives among global family offices.
   
2. Understand your options in both investing and philanthropy; In addition to sustainability challenges, consider how these challenges are reflected in your portfolios. For example, if you are focused on water scarcity, your preference may be on how to preserve water or how to ensure that the companies you invest in properly manage this resource or both. Each would have its own set of implementation approaches.
3. Develop a plan to deploy your capital. Identify the main objectives for each sustainability issue you care about and each capital pool you are utilizing. Different objectives will point to different ideas for your investments and philanthropy, and often these ideas can work in concert with each other.

At a time when funding for environmental and societal challenges is simultaneously insufficient and urgent, the range of ways that capital can be deployed to address these needs is growing rapidly. There are now many more options than simply providing philanthropic grant capital or excluding companies in sectors such as gambling or alcoholic beverages from investment portfolios. New and emerging solutions give you the option of being more strategic with your philanthropy or building sustainable investment portfolios without sacrificing market returns.

At UBS, we are at the forefront of developing these new pathways to impact. We have prioritized this as an area of growth for our business and are developing innovative mechanisms for you to achieve your philanthropic and impact objectives. And we are among several organizations around the world aiming to collectively develop frameworks and solutions that attract more capital for tackling environmental and societal challenges at scale.

¹ This terminology refers to definitions in the UBS Sustainable Investing Framework and does not refer or relate to any product specific regulatory labelling regime or naming conventions.

This article is for informational and educational purposes only and should not be relied upon as investment advice or the basis for making any investment decisions. The views and opinions expressed may not be those of UBS Financial Services Inc. UBS Financial Services Inc. does not verify and does not guarantee the accuracy or completeness of the information presented.

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Important information about sustainable investments 
Various products and services use terms or labels related to sustainable investments. However, industry standards and terminology related to sustainable investments will differ and are evolving. Therefore, you should carefully review the offering materials to understand how a particular product or strategy approaches sustainable investing and if the approach aligns with your goals and objectives. 

At UBS Financial Services Inc., we continue to develop our standards and  framework for sustainable investing. We believe sustainable investment strategies should have an explicit focus on sustainability objectives or outcomes. However, we do not review every product to determine consistency with our standards, nor do all products that we make available align with our approach. Your UBS Financial Services Inc. Financial Advisor can assist you in identifying products that we have reviewed and determined to be consistent with our standards. 

The ability to implement the approaches to sustainable investing will depend on the product or service selected; they are not available for all products, services or accounts offered through UBS.

Additional considerations and risks:
Sustainable investments across geographies and styles approach the integration of environmental, social and governance factors and other sustainability considerations and incorporate the findings in a variety of ways. Sustainable investing-related strategies may or may not result in favorable investment performance and the strategy may forego favorable market opportunities in order to adhere to sustainable investing-related strategies or mandates. Issuers may not necessarily meet high performance standards on all aspects of sustainability considerations. In addition, there is no guarantee that a product’s sustainable investing-related strategy will be successful. Companies, as well as related investment strategies, face increasing risks associated with different and evolving industry and regulatory standards as well as public sentiment toward sustainable and diversity approaches; these risks include, but are not limited to, becoming the subject of investigations and enforcement actions, litigation, public boycott, and reputational harm.

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