Impact Shares steps into new political scenario with hope of making a difference
The not for profit ETF issuer Impact Shares has announced that Marvin Owens (pictured), previously the Senior Director of Economic Development at the NAACP, is to join the firm as Chief Engagement Officer.
His appointment comes as The Rockefeller Foundation has provided Impact Shares with a USD3 million operating line of capital.
Ethan Powell, CEO of Impact Shares, explains that Owens will help lead corporate engagement efforts for all three Impact Shares funds, including the Impact Shares NAACP Minority Empowerment ETF (NYSE: NACP).
Impact Shares remits the 0.75 bps expense ratio back to the NAACP after paying operating costs.
In an interview that comes just after confirmation of Biden’s win in the US Presidential election, Powell comments: “On a macro level, what we have seen in the US over the last four years is the private sector trying to fill a leadership void that has been left by the public sector.”
“Both of our political parties have drifted so far to the extremes to appeal to their bases that they have disenfranchised the middle.”
Powell explains that his thinking in founding Impact Shares in 2015 was for it to be a platform for the public advocacy and private sector to demonstrate their leadership in social and environmental goals.
“There is a credibility and communication problem with ESG,” he says. “For me, you need to evaluate ESG strategies just as you would any other financial outcome. Does the manager have the People, the Process and the Philosophy to achieve the social and environmental outcomes they seek and does that objective align with the investors’ goals? That can be hard to understand when offered by a large bank versus a well-known advocacy group.”
Impact Shares has three theories of change: the social screens represent a common language of engagement between the advocacy group and the private sector; Impact Shares is organised as a not for profit and the net advisory proceeds go back to the social advocacy organisations with which the firm is partnered and thirdly, by offering more targeted social and environmental objectives defined by advocacy groups the platform aims to break down the communication credibility level.
Ultimately, the firm wants to have a specific ETF for each social and environmental issue. The NACP ETF is part of the goal to extend the NAACP’s mission into the private sector using the power of capital markets to improve social outcomes, Powell says.
“Lots of financial intermediaries don’t have the tools to help their clients address their ESG goals,” he says. “If investors come in and say ‘I want to align my capital with my ESG goals’, they often get an eye roll. But targeted ETFs with clear financial and ESG objectives offer another way that advisers can help investors with their ESG aims.”
The firm launched its first funds in 2018 and has USD30 million under management. The NACP ETF was its first launch. “We knew that our first launch would be geared towards empowering historically marginalised communities,” Powell says.
Owens was at the NAACP when Impact Shares launched the NACP ETF and was working with Powell on the product. “We had been creating these social screens, NAACP corporate score cards, engaging corporations in hard conversations with what is happening internally for people of colour within the corporate environment,” Owens says.
“The opportunity to apply that strategy to publicly traded companies was very exciting. This ETF was an extension of the broader engagement strategy at the NAACP.”
Owens has joined Impact Shares to engage investors, corporates and advocacy organisations to push for social change.
“It is especially important in this environment right now, with all the events of the past seven months in the US, which has made this fund an opportunity for corporates and investors to engage in this conversation and to create a more equable society for all.”
Owens believes that investors are increasingly interested in making sure their capital is being used to align with their social agenda, and Impact Shares’ strap line is: ‘Money talks. Is your money saying what you want it to say?’
“What we are seeing from the election is a ground swell of support on strategies that address racial equality,” Owens says. “Capital markets have been uncomfortable or unwilling to take this on and this has provided a platform for engagement to proclaim the gospel of racial equality using the capital markets.”
The goal for the firm is to reach investors who want to ensure their portfolios reflect the causes they care deeply about, and to grow the assets in order to create the engagement and monetary impact to enable the NAACP to improve corporate responsibility as it relates to communities of colour.
Powell says that the difficulty of achieving financial alpha in the public markets requires investors to think about how they invest.
“What are our desired social outcomes?” Powell asks. “Our industry doesn’t work well with others, we have created a utility for engagement which is effectively owned by the public and acts as a tour guide for capital markets for advocacy organisations to more effectively engage with the private sector to make us a better society.”
Current investors in the funds are retail and family offices. “We would like mission aligned institutions to invest to demonstrate their commitment to empowering people and demonstrate they are on the right side of history,” Powell says.