John Goldstein, Managing Director at Goldman Sachs, and Co-Founder at Imprint Capital Advisors
What will you be discussing at The Economist's Impact Investing event in New York on February 12?
I’ll be participating in a debate on the “profitability” of impact investing. One of the questions we hear the most is whether you can generate market rates of return with impact investing. Our experience tells us that you can, but it takes a lot of work.
It’s a full-time effort, and requires a dedicated, research oriented team with its own independent investment process. But that said, it’s incumbent upon investors to call upon the resources and expertise of their broader organization. You’re not going to get the work done without a dedicated team, and you’re not going to do it well if you don’t leverage the full organization.
In what ways is impact investing making headway, and where is it lagging?
Interest in impact investing has erupted in recent years. Since Imprint Capital was acquired by Goldman Sachs in 2015, we’ve seen more and more organizations get involved, which is great.
Of course the challenge, as with any investment, is translating awareness into disciplined thoughtful implementation. It’s easy to get overwhelmed, so it’s incumbent upon investors like us to cut through some of this noise and complexity to execute with discipline.
Can you really tell when businesses are “being good”?
Impact investing is less about figuring out who’s “good,” or who’s “bad,” than about finding the companies that have as their core mission solving an environmental or social problem.
So as an impact investor, preparing financial and impact theses isn’t enough, because you’re going to need the deep sector research to help discover the opportunities and deploy capital consistent with your theses. And that’s the real trick.
For broad efforts to integrate ESG into diversified portfolios, the question is closer to: how does one employ a broad, data-driven approach to analyze the ESG quotient of companies and, from there, can you leverage good old fashioned fundamental company analysis to get to the right decision?
What are the payoffs and costs associated with impact investing for all parties?
As with any specialized, research-intensive investment effort, it takes significant investment, both in time and infrastructure. The benefits should be obvious – we’re working to find attractive investment opportunities that may have secular tailwinds and align with our clients’ values and worldview.
Where have you seen impact investing make the biggest strides in recent years?
We’ve seen an evolution in impact investing to where it’s now deeply integrated within and across institutional portfolios. It’s no longer a carve-out, but a part of a thoughtful and well-structured investment process that can be weaved through an entire portfolio.