TAF’s recent divestment shows the importance of fund managers aligning with impact

Guest blogger Simon Segal is an experienced pension plan trustee and board member and sits on TAF’s Investment Committee.  

The secret is out: socially and environmentally responsible investments can deliver commercial returns. TAF has demonstrated the point again and again. But returns are not the only reason why fund managers should offer impact-aligned investments. If they don’t, clients are starting to walk away.  

Count TAF among those clients. I sit on TAF’s Investment Committee and review our portfolio regularly, assessing risk and analysing new opportunities. We recently moved $20 million of our endowment from our core fixed-income fund with one of Canada’s major banks over to two fund managers that offer high-impact investment options.  

TAF’s impact investing staff and committee members are excited to share the details about the two investments, AlphaFixe Green Bond Fund and RPIA Corporate Bond Fossil Fuel Exclusion Fund.  

I’m pleased by how these managers improve the overall diversity of our portfolio.  Diversification was a primary goal for TAF when we set out to transition a portion of our fixed income assets.  However, as someone who believes in aligning investments with organizational purpose, the number one thing I like about our new fund managers is that they enable us to better align our fixed income allocation with TAF’s values – something that was not possible in the fixed income arena just a few years ago.  The range of ESG implementation approaches is now so much broader. I am pleased to see this variety. 

For example, AlphaFixe has a 100% green bond portfolio with an A rating average, while RPIA actively manages their fossil fuel exclusion bond portfolio with the explicit aim of having a lower weighted average carbon intensity.

Finding the right impact investment opportunities will vary a lot, as there is no single definition of impact, and each organization has its own value priorities. I encourage other investors to seek impact-alignment and diversify based on your own needs. Yet, importantly, if your fund managers can’t provide alignment with your values, it may be time to seek one who can.