IMPACT MOAT

Beleggingsanalisten gebruiken het begrip Moat -Engels voor de (soms) met water gevulde slotgracht om een vesting- om de vooruitzichten van een belegging/bedrijf te beschrijven ten opzichte van concurrenten. 

De term wordt o.a. gebruikt door rater Morningstar dat eer indices mee bouwt. Moat is gebaseerd op 4(5) kenmerken : switching costs, network effects, intangible assets, efficient scale (& competitive & cost advantage). De rating schat de voorsprong op de concurrentie van narrow (smal) 0 of 1 jaar tot wide (brede) moat tot wel 20 of 10 jaar afhankelijk van de sector.

Het bepalen van moat is een 'uitdaging' bij bijv. diversified largecaps door het opereren op meerdere markten en in de hele wereld, laat staan voor transformerende ondernemingen & snel opkomende, veranderende sectoren.

Met transformerend bedoel ik bedrijven die de Klimaat & Impact transitie als strategie voor de onderneming/sector omarmen en zich heruitvinden als Impact Growth Stock. Het begint met kosten-besparende activiteiten zoals het terugdringen van negatieve impact door te besparen op grondstoffen, energie & watergebruik, afval & etc. 

Het evolueert naar nog steeds kostenbesparende activiteiten met positieve impact in het Safety&Health & personeelsmanagement en door nieuwe diensten & producten met (meer) impact te ontwikkelen. Dat kan ook als de traditionele, oorspronkelijke kernactiviteiten geen Basisbehoeften of Impact Tech zijn. #DSM & #Philips.

MOAT: Kwantiteit, score op UN SDG Goals?

Het ligt voor de hand om de Impact Moat = breed te bestempelen als veel impact indicatoren worden beoogd & gemeten, bijv. de 17(2 criteria) Global Sustainable Development Goals van de VN voor alle mensen, landen en ondernemingen: interne en onderlinge doelen.

Dat kan voor (Sociale) ondernemingen en beleggingsproducten. De meeste kijken ondernemingen en SDG/Global Impact indices meestal naar kern- & operationele ESG activiteiten en kiezen dan een (focus) of enkele SDGs. Moederindices met usual suspects. Bijv iShares Global Impact en Swells Impact 400.

VIGEO EIRIS doet het iets ruimer voor de Wereldbank: https://www.slideshare.net/alcanne/vigeo-eiros-sdg-thema-per-company

MOAT: Kwaliteit, de diepte in bij een SDG

Een andere praktijk van impact moat bepaling is bijv. Equality & Diversity indices/indexfondsen die kijken naar het aantal Vrouwen in de Board (1) & het Management (2) & (vastgelegd) beleid (ambitie & monitoring, 3). 

ETFdbase heeft ESG data van MSCI en hanteert voor de ESG score voor ETFs op Board Diversity: No Female Directors, Three or More Female Directors & Females Represent 30% of Director. https://etfdb.com/esg-investing/governance-issues/board-diversity/

Een bredere moat voor bedrijven en indices is bijv. gebouwd op veel meer relevante data, zoals de Nederlandse Equileap index familie van vrouwvriendelijke bedrijven op basis van analyse van 3000 bedrijven in 23 landen en 19 criteria.

A: Gender Balance in Leadership and Workforce: 

› Non-executive board › Executives › Senior management › Workforce › Promotion & career development opportunities;

B: Equal Compensation and Work/Life Balance: 

› Fair remuneration › Equal pay › Parental leave › Flexible work Options;

C: Policies Promoting Gender Equality: 

› Training & career development › Recruitment strategy › Freedom from violence, abuse, & sexual harassment › Safety at work › Human rights › Social supply chain › Supplier diversity › Employee protection; &

D: Commitment to Women’s Empowerment: 

› Gender Audit.

Meer op https://equileap.org

Beide MOAT interpretaties focusen op de bedrijfsvoering & impact Investing focust primair op kernactiviteiten & dan bedrijfsvoering.

ESG inspanningen van largecaps hebben door hun omvang grote 'do less harm'' & ''do good'' impact binnen de onderneming, de productieketen, maar ook in de sectoren en landen waar zijn actief zijn als katalysator.

Elke onderneming & investering moet bijdragen aan economische groei: omzet & winst en werkgelegenheid. De ontwikkelingsfase waarin een economie en/of sector zich bevindt is doorslaggevend. De NL ontwikkelings-bank FMO investeert in projecten die werkgelegenheid (1e impact metric).

Ondernemingen in ontwikkelde markten (moeten) investeren in tech-nologische ontwikkelingen zoals automatisering = minder zwaar & monotoon werk + IRD, Refurbishing & Circulair Ondernemen.

IMPACT MOAT: Kosten & Tijdspad 

van de Transitie naar Impact (Growth) Stock

Omdat we leven op een wereld met een groeiende & vergrijzende bevolking, eindige grondstoffen en tijdens een klimaattransitie zijn investeringen in ESG, do less harm impact essentieel om de economie om te vormen, maar onvoldoende.

Inspanningen voor Innovatie, Research & Development i.e. technologische vooruitgang die niet bijdragen aan (lange termijn) kostenbesparing & concurrentievoordeel zoals ESG inspanningen maar ook niet aan basisbehoeften & impact technologie zijn niet meer toereikend voor de evolutie naar Nieuw Kapitalisme.

Beinhockcer & Hanna https://www.mckinsey.com/featured-insights/long-term-capitalism/redefining-capitalism

Ondernemingen & Investeerders zullen moeten focusen op Societal Solutions, producten & diensten aanbieden voor basisbehoeften & de impact tech die basisbehoeften voor zoveel mogelijk mensen bereikbaar & betaalbaar maken.

Idealiter weten we precies welke technologische vooruitgang de meeste maatschappelijke (positieve) impact zal hebben. Al doende leert men. Het internet begon als defensie project, werd omarmd door de wetenschap voor kennisuitwisseling, vervolgens decades gedomineerd door pornosurfers voordat het miljarden mensen toegang gaf tot essentiële informatie & grootschalig werkgelegenheid & economische groei creëerde.

Omdat niemand in de toekomst kan kijken is Impact focused Governance de voor de hand liggende keuze van ondernemingen & sectoren. Zij hebben inzicht in de impact van hun diensten & producten & productiewijze & hun (netto) toegevoegde waarde voor de samenleving (economische groei, werkgelegenheid, belastingafdracht).

Ondernemingen & Sectoren hebben inzicht in de kansen van Innovatie, Research & Development en hoe deze bijdragen (aan economische groei, werkgelegenheid, belastingafdracht) en maatschappelijke impact. Concurrentie (voordeel) focust op voorzien in Basisbehoeften & (betaalbare) toegang door Impact Technologie.

Ondernemingen & Sectoren kunnen kosten & budgetten vaststellen & het tijdpad bepalen van hun transitie, de interne & externe switching costs naar impact diensten & producten, het creëren van de benodigde schaal, winstgevende economies of scale door hun intangible assets (impact brands & patents) en network effects die de impact transitie versnellen.

Klinkt bekend?

Het zijn Morningstar moat definitie kenmerken, maar gericht op de transitie naar impact concurrentie.
''The measure of the competitive barrier, if any, that gives a company an advantage over its rivals and allows it to generate above-average returns on invested capital. Four major types of economic moats are: high customer switching costs; economies of scale: intangible assets such as brands or patents & the Network Effect”. https://www.morningstar.com/InvGlossary/economic_moat.aspx

Het network effect, concurrentie treed op tussen ondernemingen (leaders & laggards) “the value of a company's service increases for both new and existing users as more people use the service” maar vooral tussen sectoren.

Alle moat elementen worden versterkt & verrneld door regulering & internationaal overheidsingrijpen & desinvesteringen, de uitstroom van investeringskapitaal. 

Denk bv aan de sectoren die Colombia Threadneedle deselecteert in haar Social Bonds Fund of Eccles & Consolandi op basis van bijdrage aan de SDG's zoals finance (!, but we can fix that with impact financing AJH). 

HIGH RISK:
● Aerospace/Defense ● Air Transportation ● Auto Loans ● Auto Parts & Equipment ● Automakers ● Energy – Exploration & Production ● Foreign Sovereign (if general use of proceeds for central gov) ● Gaming ● Government Guaranteed (if general use of proceeds for central gov) ● Integrated Energy ● Metals/Mining Excluding Steel ● Oil Refining & Marketing ● Oil Field Equipment & Services ● Steel Producers/Products ● Tobacco.

NB Tabak heeft niet toevallig de laagste SDG bijdrage in Eccles/Consolandi rating systeem.

MINIMAL or UNUSUAL SOCIAL BENEFIT:
● Advertising ● Beverage ● Brokerage ● Cable & Satellite TV ● Insurance Brokerage ● Investments & Misc Financial Services (concullega's) ● Packaging ● Media Content ● Media – Diversified ● Machinery ● Monoline Insurance

● Multi-Line Insurance ● Recreation & Travel Reinsurance ● Software/Services ● Sovereign ● Tech Hardware & Equipment ● Non-European issuers (excluding international or social bonds).

Bron: Colombia Threadneedle Social Bonds Fund Guide 2018. SOCIAL INVESTMENT GUIDELINES THREADNEEDLE EUROPEAN SOCIAL BOND FUND Uitsluiting High Social Risk voetnoot 7, p.20. Meer over EXCLUSIE 2.0 SECTOREN in mijn eBook ImpactInvesting NL:

https://image.slidesharecdn.com/ebookimpactinvestingnl7jaarinvesterenmetimpact-181220185225/95/ebook-impact-investing-nl-7-jaar-investeren-met-impact-alcanne-35-638.jpg?cb=1545332555

Sectoral Contrubition to United Nations Sustainable Development Goals Prof Bob Eccles & Dr Constanza Consolandi in MIT Sloan Review https://image.slidesharecdn.com/ebookimpactinvestingnl7jaarinvesterenmetimpact-181220185225/95/ebook-impact-investing-nl-7-jaar-investeren-met-impact-alcanne-42-638.jpg?cb=1545332555 https://image.slidesharecdn.com/ebookimpactinvestingnl7jaarinvesterenmetimpact-181220185225/95/ebook-impact-investing-nl-7-jaar-investeren-met-impact-alcanne-43-638.jpg?cb=1545332555

Bob Eccles in Forbes (sub) sectoren analyses serie https://www.forbes.com/sites/bobeccles/

e-Book Impact Investing NL 7 jaar Investeren met Impact

https://www.slideshare.net/secret/G9lgDcZ6jtODpY update 12juni 2019

https://www.slideshare.net/secret/G9lgDcZ6jtODpY update 12juni 2019

Wat is het, een korte geschiedenis 

Impact Investing en de UN Global Goals

De Investeerders: Exclusief & Inclusief

TOOL 1: 5 Types Impact Investeringen

Standaard impact investeringsinstrumenten

Van Theorie naar Praktijk

TOOL 2: Impact Asset Classes

TOOL 3: De Impact Bijsluiter, 

Impactniveau's (-1 tot 6)

Transparantie ESG verbreding & verdieping Materiality & SDG's

Exclusie sectoren, netto impact van ETFs & SDGs

TOOL 4: Impact Investment Rating 

Mock Integrated Reports

TOOL 5: Impact Trends & Thema's

Impact Investing experts over Public Equity Impact Investing: 

PYMWYMIC & WIRE Group

TOOL 6: Checklist Crowdfunding voor Impact

Brede & Diepe Impact

TOOL 7: Beslisbomen Impact Investing

 de Materiality of Sustainability

TOOL 8: Het Ideale Impact Investeringsproduct

TOOL 9: Checklist Impact Investing Fondsen

TOOL 10: Profielen Impact Investing Adviseurs, Teaser

TOOL 11: Mythes, feiten & drogredenen over Impact Investing.

TOOL 12: Picking Protocol, 

Nawoord & Retro portfolio links

Over de Auteur & Appendix met links naar Tools NL & EN en bronnen

https://www.slideshare.net/alcanne/e-book-impact-investing-nl-7-jaar-investeren-met-impact-126379703 106 pagina's 2011-2018

Impact Investing & the UN Global Goals & Index Funds

Impact investing themes strongly resemble the 17 UN Global Goals or Sustainable Development Goals (SDG's), which are the successors to the Millennium Goals. The latter have contributed to decreasing extreme poverty, hunger, diseases & child mortality and gender inequality. Also to increased access to clean water & primary education, protection of the environment & biodiversity and global cooperation to achieve the goals.

We now have twice as many goals & themes: such as #SDG8: decent work & economic growth. So no growth with awful labor conditions and insufficient 'Living Wage'. #SDG9 is industry, innovation & infrastructure, for without technological progress the goals are unachievable.

#SDG10: Reduced Inequalities, next to #SDG5 Gender Equality, is aimed at inequality within countries (next to inequality between countries). Policies should pay attention to the needs of disadvantaged & marginalized populations. In impact investing jargon underserved communities whether they are ill, old, handicapped, poorly educated or people simply living in the wrong place or time.

The 2e Global Agenda has the crucial impact investing characteristic: private investors are called upon to invest too.

Investors have been asking for it for years and e.g. in largecaps, multinationals strategies the SDG's are becoming familiar drivers. For both daily operations in Environment, Social & Governance management and being proactive & Futureproof in planning for long term mega trends such as non renawable resources & human capital.

Impact investing & Sustainable Development Goals

In this upcoming posts I will look at SDG opportunities in :

• (sub)sector(s) contribution to the SDG's as rated by Bob best-in-class & Materiality-of-Sustainability Eccles, based on SASB metrics (Sustainability Accounting Standards Board); 

• Listed companies (stocks & bonds) in SDG sectors & themes (core activities, their ESG ratings (Yahoo Finance by Sustainalytics) & CSRHub ratings on Community, Employee, Environment & Governance & exclusion based on controversy rating;

• Listed investment products in SDG sectors & themes :strategy, tactics & relevance;

• Listed companies rated on Research, Development & Innovation RDI & investments, Mergers & Acquistion M&A in companies offering disruptive technological solutions for the SDG's:

ESG RESEARCH BUREAU'S & the SDGs

I'm hardly the first to look into the Global Goals' investment opportunities. Reputable raters & indexbuilders developed methodologies, indexes for ETP's, Notes & Funds. These indices & investment products are 100% transparant (with periodic changes).

MSCI, Risk & ESG rater, launched an index & Blackrock the iShares Global Impact ETF in 2016. MSCI organized the 17 SDGs in: Basic Needs, Natural Capital, Climate Change, Empowerment & Governance. The index holds 100 large & midcaps based on revenues (av. 75%) from SDG activitities.

MSCI https://www.msci.com/msci-acwi-sustainable-impact-index

iShares ETF https://www.ishares.com/us/products/283378/ishares-msci-global-impact-etf-fund/

ESG researcher VigeoEIRIS & indexbuilder Solactive created the Solactive Sustainable Development Goals World Index for the WorldBank with 50 largecaps (min. 20% revenues from SDG activitities) Borsa Italiana ISIN: XS1365236196

Solactive Index https://www.solactive.com/de/?s=development&indexmembers=DE000SLA2M49

Wheb Investment analysed it's (2009) Sustainability Fund portfolio holdings on SDG's themes: whebgroup.com

INTERESTING LEADS, but unfortunately not accessible & affordable for me or very appealing, e.g. for lack of direct People Impact. So I will look for opportunities in the UN GlobalGoals one-on-one. For #SDG1 No Poverty I will focus on micro-, inclusive & meso finance. The latter are SME investments & the employment & economic growth accelerator (so also SDG8).

I'll also look into #fintech, finance innovation #SDG9. Micro or 'inclusive finance' is impact investings largest sector in AuM. It does not have a dedicated SDG, but all SDGs need access to finance & impact investments.

Dear Bill Gates

you're probably used to the annual press release stating: the rich are getting richer owning as much as half the worlds poorest people do. 

The report is timely presented just before the World Economic Forum meeting in Davos. It's aim: to urge attending companies, politicians, visionary leaders, researchers and non profits to collaborate on global challenges such as poverty & inequality and integrate them in the transformation into the 4^th Industrial Revolution*.

As you made your fortune in IT, the catalyst of the 3^rd Industrial Revolution, built one of the largest companies in the world and work in impact investment, a catalyst for societal & environmental returns, you have a unique set of skills, expertise, network and financial means.

I challenge you to buy a dozen listed companies

In basic needs & impact tech sectors and transform the companies into ''model'' New Capitalism companies offering solutions to societal challenges. Without undermining profitability, because without profit and growth the companies will perish and so will their societal solutions.

A dozen companies as beacons & examples to stress the urgency of inclusive basic needs and impact tech's leapfrog promise to accelerate & scale solutions rapidly & globally.

Private but Public Equity Capital

I know impact investing is often considered as mainly a private equity investment activity, but the UN Sustainable Development Goals specifically include all private capital & companies to pursue these Global Goals.

Super Sustainable sector leaders, especially in Europe, have embraced the SDGs, but American companies seem to be inert or lag behind**. As do most traditional small & midcap companies considering ESG: Environmental, Social & Governance policies a luxury they cannot afford.

Perfect timing

Many politicians made sure ''they didn't waste a good crisis'' for reform and future proof transformations during the last global financial & credit crisis. Companies can use the present economic progress to invest in sectoral challenges and opportunities. Mission Possible, but you have to start today to think at least ten years from now.

Unique instrument

A dozen show cases of listed companies fast forwarding the 4^th Industrial Revolution incorporating the UN's SDGs in their mission, strategy and tactics can inspire, lead, offer a road map and save on (capital) investments.

It has never been done before

Why listed companies?

Because of their financial transparency educating financial analysts on strategies towards New Capitalism, so to avoid decades of discussion on the return of responsibly & sustainably managed companies. Also a dozen case studies in the here & now are much sexier than educating analysts and intermediaries on Facts & Figures, Trends, visions etc. 

 

Obviously the model companies will be(come) integrated reporters (GRI), publish ESG performance and impact metrics.

Listed companies are ''inclusive'' for (retail) investors. Being catalysts for the 4^th Industrial Revolution gives them opportunity to attract new and bigger investors***, get access to (cheaper) capital and new customers in their new marketing strategy of societal solutions (revenue & profit).

Private equity may get better returns but the public listed equity market is much larger & better regulated. It will attract more investors (back) in the present economic climate because of it's safeguards from regulation & legislation.

An iconic initiative in transforming listed companies will affect the financial system and global economy on a much larger scale than exclusive, less transparent private equity investments.

We need a skilled entrepreneur, with knowledge of global challenges & experience in sustainable & impact investing as strategic theory of change.

My proposal is a tactical move with exponential effect on financial markets.

Are you game?

kind regards,

Alcanne Houtzaager

Inclusive² Impact Investing

Tools & Thoughtpieces

* https://www.weforum.org/agenda/archive/fourth-industrial-revolution/

** https://www.forbes.com/sites/terrywaghorn/2017/12/04/sustainable-reporting-lessons-from-the-fortune-500/#4517bdb66564

*** The introduction of Green or Climate Bonds in 2007 has sparked a market with over 1560billion US$ in emissions in 2017 with expectations for 2-018 ranging from 250-300 Billion US$. Www.Climatebonds.net