Why family offices need to be realistic about impact investing

Family offices might be better off separating profits from the desire to make the world a better place, when it comes to allocating capital. 

Awareness of sustainability and impact factors are interesting, but not all environmental, social, and governance objectives will fit into investment criteria, speakers at a panel discussion said at AsianInvestor’s Family Office Briefing in Hong Kong on June 18.

Instead, family offices could establish a separate fund for impact investment on the side of the main portfolio, according to Kavi Harilela, director at FGA Trust and Harilela Global Advisory. 

The potentially relatively lower return from these allocations would therefore be perceived and scrutinised in a more benign light, the third-generation member of the Hong Kong-based Harilela family argues. 

“I try to differentiate because it is a net sum game. If I am sacrificing profits to do a sustainable project, I need to think twice whether that investment fits the returns benchmark or if there is an offset so it sits better elsewhere,” Harilela said on stage. 

“Ideally, you want the best of both worlds, but most likely, you’re never going to get that at the same time,”he added. 

Harilela also sees green energy as a trend to keep focusing on, as the sector still holds unrealised potential and has only just taken off. 

“We know that’s still hot. Green energy has been around for a long time, but now we have seen true movement towards that space and more activities. A lot more opportunities will come as awareness of global warming grows further,” he said.

https://www.asianinvestor.net/article/why-family-offices-need-to-be-realistic-about-impact-investing/496766