Interview Series: Sustainable investing with UBS

Jaume Iglésies is a Sustainable Investing Advisor with UBS, bringing 7 years of experience working with clients who believe that their wealth should bring about more than just financial returns.

Jaume works with mostly private individuals or family offices looking to invest globally and across all asset classes. In contrast to impact investing firms, the clients working with Jaume are looking first for a return on their investment, and second for a positive impact.

“The notion that we have to do something poverty and climate change is increasing, and financial institutions are starting to jump and offer more possibilities for investors to make more sustainable investments.”

What is stopping more people from making impact investments?

Jaume believes that there are three main factors that are somewhat slowing the growth of impact investing.

1. Awareness

“Awareness is still low, but it is increasing, as there is more of a buzz around the subject, and individuals are more educated. As awareness increases, interest will as well. UBS is spending a lot of time talking to financial advisors, and building awareness campaigns.”

2. Education on the financial intermediaries side

“If you are not an investment expert, but you come from the IT sector for example, and your financial advisors doesn’t know anything, aren’t interested, or are skeptical with regards to impact investments, it is unlikely that you would pursue sustainable investment possibilities”.

3. Number of investable products

“The number of offerings that can prove that you have a reasonable chance of getting your money back with a team that has been working together for a long time is limited. There is also the problem of due diligence”.

Issue of Due Diligence

In impact investing you have small ticket sizes and unknown markets. On top of that investors may not be experts in the fields in which they are investing, so they are relying on the due diligence done by other institutions, which often leads to investing in a pool. With such small ticket sizes, due diligence comes at a high price and its often not worth the cost for investors.

“I think one of the biggest things that could get more people involved is shared due diligence. One of the biggest problems is that we don’t know if a impact investment is good or bad, because its never been made before. Investing in emerging markets, people are not specialised in those markets, and then it just becomes a bet, one of the things that could help, putting good people in due diligence deals and making the results available to everyone.”

What about the issue of risk?

“In my opinion, not at all. Or at least absolutely comparable to any other risk of other investment. Sustainable investing has proved to be more resilient than equity for example. Impact investing is more risky, because it tends to be more private equity, and private equity is less liquid and by nature more risky because you can’t act upon it if the markets start to crash”.

Thanks to Jaume for his insight on impact investing and sustainable finance trends. To find out more about investing with UBS: https://www.ubs.com/global/en/wealth-management/chief-investment-office/key-topics/sustainable-impact-investing.html