Some notable stirrings in and around impact investing, at two of the flagship players in mainstream capital markets, are likely to have significant consequences but have gone largely unnoticed in recent months.
Morgan Stanley and the California Public Employees Retirement System (CalPERS) have taken important first steps to institutionalize a role for capital that, above and beyond maximizing financial returns, includes delivery of measurable, positive social and environmental benefits.
The importance of the developments cannot be understated. Morgan Stanley is one of the largest wealth management companies in the world, with over $1.7 trillion in client assets. CalPERS is one the largest five pension funds, with approximately $235 billion in assets.
Morgan Stanley made a big splash back in April when the firm unveiled its "Investing with Impact" platform. The platform includes a broad range of options for clients, from negative screening for "objectionable" companies, to positive screening where proactivity on Environmental, Social and Governance (ESG) issues creates value, to investment in sectors targeting specific benefits, and finally to "impact investing", or the participation in funds "focused on providing capital directly into private enterprises structured to effect positive social or environmental change," according to Audrey Choi Morgan Stanley Managing Director and Head of Global Sustainable Finance, and Hilary Irby, Executive Director and Head of the Morgan Stanley Investing with Impact Initiative.