An inconvenient youth

Recommendations

Be explicit and uncompromising on exclusions. If you want to exclude all weapons and armaments – not just controversial weapons – state this clearly and verify compliance. Don’t assume weapons or defence exclusions cover everything. This can apply to other exclusions as well.
Embrace uncomfortable conversations such as how your investments may relate to conflict, genocide, and breaches of international law.
Open up investment decisions. Consider the role that beneficiaries, those with lived experience, and other stakeholders can play in your investment processes. Participation does not replace trustee responsibilities. But opening up investment conversations can challenge assumptions and strengthen alignment between investments and asset owner missions. It can also push investors beyond their comfort zones, help bring accountability to decisions, and make conversations more accessible for everyone.

Address client and societal concerns, even when they’re difficult and challenge industry norms. When clients explicitly request consideration of conflict and genocide, for example, respond substantively. If you can’t deliver on these themes, explain why honestly rather than ignoring them. The investment industry must stretch beyond its comfort zone to meet the needs of asset owners.
Build participation into your investment process, not just your pitch. Explore how you can incorporate affected communities in decision-making, demonstrate how this will work in practice. Look at embedding participation structurally through advisory boards, investment committee seats, or regular stakeholder forums. Make investment more accessible for everyone, through clearer language and less jargon.

Recognise that trade-offs are inevitable – and decide what matters most. The “perfect” investment solution that maximises impact and financial return, while minimising financial risk, does not currently exist. However, there are lots of opportunities to invest with impact and you can effectively balance these three factors. Having discussions that acknowledge these trade-offs is incredibly valuable.

Get to the bottom of your client’s priorities – don’t assume it’s only financial return. Many asset owners now want to think about how their capital aligns with their missions. Speak with them to understand what impact priorities they seek and what trade-offs they may be willing to make.
Move beyond SDG mapping to genuine impact measurement. Using the SDGs as a labelling framework is not the same as measuring and managing impact. Adopt recognised frameworks like the five dimensions of impact or the Operating Principles for Impact Management (OPIM) and consider third-party verification of your impact claims to build credibility.

Don’t expect impact investments to match mainstream market benchmarks. If you exclude high-carbon or extractive companies that are included in indices like the MSCI World, accept that your returns are likely to look different. Set appropriate expectations and communicate realistic targets to ISPs based on your actual investable universe, not global market indices.
Consider your liquidity requirements in light of your mission. If you’re genuinely operating as a long-term investor, challenge whether you need daily or quarterly liquidity across your entire portfolio. Consider what portion of your investments could be committed to longer-term, less liquid investments that may deliver higher impact.

Be honest about benchmark limitations and propose realistic alternatives. If you’re benchmarking an impact fund against the MSCI World while excluding some or all of the Magnificent 7 companies, acknowledge this openly and explain why you’ve chosen it. Better yet, propose alternative benchmarks that actually reflect your investable universe. Help clients understand what “reasonable returns” actually means for impact-focused funds.
Design products that balance impact ambition with practical liquidity needs. Recognise that many asset owners are constrained by liquidity requirements, even if they’re philosophically long-term investors. Rather than offering only ten-year closed-end funds or daily-traded equities, innovate around semi-liquid structures or hybrid models. Explain liquidity trade-offs clearly so clients can make informed decisions.

Prioritise organisational alignment, including pay gaps, when selecting ISPs. Evaluate ISPs’ ownership structure, governance, and operational values. Prioritise B Corp certification and ownership/governance protections that prevent commercial interests dominating values. Push all ISPs to disclose their gender, ethnicity, and other pay gaps, and encourage meaningful progress to close them.
Push for transparency from ISPs. Ask ISPs to disclose not just their best investments but their worst – and why those holdings remain in the fund. Request full lists of holdings where possible. Challenge ISPs who only showcase success stories. If they claim rigorous impact management, they should be able to demonstrate critical reflection and trade-offs. Use transparency as a proxy for integrity and impact credibility.

Be transparent about your organisational structure. Clearly explain your ownership model, governance protections, and how you balance values with commercial pressures. Consider B Corp certification or similar verification to give clients confidence in your organisational alignment. If you already have areas of ownership and governance that align with charities, communicate that clearly and how you are different from the mainstream.
Report all pay gaps voluntarily and work towards meaningful progress. Don’t wait for legal requirements – start working on reporting your gender, ethnicity, and other pay gaps, unless you employ a very small number of people. Publish multi-year data to demonstrate trends and explain what actions you’re taking to close gaps. Even very small ISPs should disclose their policies.
Be transparent about your fund – including the difficult bits. Publish full holdings lists where possible. Disclose your least impactful investments and explain the trade-offs. Transparency builds trust, particularly in an industry facing greenwashing accusations. Clients need to see that you’re critically reflective about your impact claims, not just promoting your greatest hits.