Builders Vision, a family office-backed impact investment platform, takes an "all available tools" approach to impact investing. Builders Vision targets four areas: food and agriculture, climate and energy, oceans, and community improvement projects.
There are three CIOs that lead investments for Builders Vision based on these four areas. Builders Vision uses a combination of direct investments, venture capital and growth equity, a cross-asset portfolio that includes third-party investment managers, and philanthropic investments.
There are also flexible pools of capital that Builders Vision uses to make investments in areas where they make so-called impact-first investments. These are investments that are higher risk.
"We have the flexibility to go into areas and make investments where we're hoping to build markets that will eventually have market rates of return but in the interim have high impact," explained Noelle Laing, CIO for the Builders Initiative, one of the investment teams within Builders Vision. "These are in areas like energy, food and oceans. We're making investments with first-time fund managers and early-stage companies either in debt or equity."
Ms. Laing said that using this broad approach allows them to maximize the investment opportunities that are available to them as well as the potential for positive impact. "There's a lot of white space in impact investing for people to come together with goals they want to achieve and craft solutions around that. We try to stay flexible so that we can find the right opportunities."
Builders Vision has created an internal impact measurement and management system that it uses to evaluate all of its investments to make sure that they are meeting the goals of the four focus areas.
According to Ms. Laing, the system works both as an initial screening framework to sort through investment opportunities and then once an investment is made, the system makes sure that investments are meeting their impact goals.
"It's a qualitative and quantitative process," she says. "We don't want it to become another compliance box that gets checked; we're engaged throughout the life of our investments."
Both Ms. Laing and Kathleen Simpson, CEO for the Russell Family Foundation, said that flexibility and specificity are two keys to a successful impact investment strategy. Having the flexibility to invest across asset classes can create new opportunities. It's also important to set clear impact goals. By narrowing the approach to specific focus areas, it is easier to measure impact and make sure that portfolios stay aligned, they said.
The Russell Family Foundation was launched in 1999 following the sale of the Frank Russell Company to Northwestern Mutual Life. Jane and George Russell funded the foundation with proceeds from the sale and have subsequently used the foundation to issue grants, run community programs in the Puget Sound region, and launch an impact investing program that started in 2004. The work of the foundation focuses on climate finance, education and food systems.
In the beginning, impact investing was a small part of the foundation's total portfolio — accounting for only 7% of investments in 2014. At that time, Ms. Simpson said, the foundation made a decision to divest its exposure to fossil fuels and undertake a review of its investment portfolio.
"It was really a time for us to pause, reflect and say we want our whole portfolio to align with our values," Ms. Simpson said. "We have a lean internal team and we work with external financial advisers to create our strategies. We had them model portfolios for impact. We found that we could make impact portfolios that didn't require us to make concessions on returns."
The foundation's investment portfolio is now 94% aligned to its impact goals for sustainability. In October, the foundation announced a net-zero commitment that will decarbonize its portfolio by 2030.
Like Builders Vision, Ms. Simpson said they use a variety of tools to meet these goals. They use divestment, negative screens, portfolio tilts and investments in specific funds that naturally align with the work the foundation already does on sustainability.
"We want to be able to maintain the foundation, and we have been able to do that effectively with a portfolio that is reflective of our values. We believe all investments have impact — good and bad — so you really have to look closely at what those are and whether or not they match with what you're trying to achieve," Ms. Simpson said.