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ESG and Impact: socially responsible investments

Investments guided by environmental, social and governance (ESG) principles, in addition to producing a positive economic return for investors, are aimed at generating positive and measurable effects for society and the environment.
In addition to the business results of traditional parameters, ESG criteria are increasingly used in the financial world for evaluating company performance and investment choices.
On the sidelines of the 0100 Conference Mediterranean held in Rome in recent days, we had the opportunity to interview Natasha Franks, Head of Client Reporting at Alpha Associates.
Since 1999, Alpha Associates has invested in over 300 private equity and private debt funds and in 2006 began implementing ESG standards in its portfolios.
Since 2018 it has been a signatory to the United Nations Principles for Responsible Investment (UN PRI).
read also 0100 Conference Mediterranean: appointment in Rome for private equity and venture capital How do ESG criteria influence investments and how do they fit into your strategy? Investors are increasingly attentive to ESG factors because they allow them to better evaluate financial risks.
Companies that do not adequately manage sustainability and social ethics are exposed to risks both from a legal point of view and with regards to operations and reputation.
At the same time, reporting ESG data increases knowledge of companies and the sectors in which they operate, increasing overall transparency.
For these reasons, companies that meet these criteria generate greater interest in investors.
As Alpha Associates we have been integrating ESG criteria into our investment propositions for approximately 20 years and our commitment to developing a thoughtful approach to environmental, social and governance principles forms the basis of our overall strategy, as well as being a key part of our due diligence process.
What do Alpha Associates' ESG guides include? ESG guidelines are an integral part of our investment process and portfolio monitoring and in different client mandates we implement individual guidelines for ethical and sustainable investment practices.
Our guidelines are always aligned with the latest regulations and market benchmarks, but we also try to customize them based on the manager, the type of business and the country of reference.
We can count on a dedicated ESG committee that monitors compliance with internal guidelines and individual customer requirements.
The managers selected by Alpha Associates are committed to meeting the standards indicated by regularly providing detailed reports that allow us to provide meaningful and aggregated ESG reports to our investors.
read also Tech investments and the potential of the secondary market with Alberto Chalon Why should institutional investors invest in impact? Once upon a time, obtaining attractive market returns while bringing benefits to society and the planet was considered impossible, while now there is an increasingly widespread belief that companies capable of doing so are also better performing in the long term in achieving better economic results.
In recent years, impact investing has evolved from a niche in the financial landscape to a mainstream investment strategy.
A determining factor has been the growing awareness of climate change due to the negative impact of human activities on our planet, as well as increasingly evident social inequalities.
While rapid asset growth is an encouraging sign for the future of impact investing, more capital from institutional investors will be needed to mitigate the effects of climate change and address social inequalities.
The expansion of investment strategies towards topical themes – which are generally protected from economic recessions and often more resilient to economic shocks – will however allow institutional investors to diversify their assets with the result of "doing well by doing good".

Author: Hermes A.I.

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