January 2019

Q&A with Mike Tiedemann for The Economist's Investing for Impact Event

The Economist - Investing for Impact
Michael Tiedemann, CEO of Tiedemann Advisors
January 30, 2019

Please give us a bit of background on yourself, and how your organization plays a leadership role in the impact investing space.

I am a founding partner and chief executive officer of Tiedemann Advisors. I began my career as an emerging markets research analyst at Tiedemann Investment Group (TIG). I later moved to Brazil where I worked in the equity research group at Banco Garantia, an investment bank that was later acquired by Credit Suisse. I moved back to New York City where I ran Banco Garantia’s sales and trading operations and in 2000, started Tiedemann Advisors.

Tiedemann Advisors strengthened our commitment to impact investing by acquiring Threshold Group, a leading impact investing firm founded by the Russell Family of the Russell stock indexes, in January 2018. The acquisition solidified Tiedemann Advisors as an expert and leader in the impact investing space. Today, we offer impact investing across all asset classes, aligning clients' values and goals through a proprietary impact investing diagnostic tool that is exclusive to the firm.

What will you be discussing at The Economist's Impact Investing event in New York on February 12?

I’ll be discussing the future of impact investing in light of sustainable investing assets in the US rising from $8.7 trillion in 2016 to $12 trillion in 2018. This was a significant increase that took place while a host of real systemic problems in our world began to metastasize, such as, rising GHG emissions, a widening poverty gap, increasing healthcare costs, global trade cooperation erosion and an impending decline of the bull market. I’ll discuss the relationship between the encouraging growth of impact investing within the markets alongside the growth of these negative societal issues.

I’ll also examine the notion that an economic slowdown could help to clarify the definition of “impact” and the role of impact investors. Lastly, I’ll delve into if impact investments should be prioritized during an economic slowdown due to their inherent risk management characteristics during slower economic growth periods.

In what ways is impact investing making headway, and where is it lagging?

Over the past couple of years impact investing has grown exponentially and is gaining popularity among investors. According to the US SIF, impact investments increased by 38% between 2016 and 2018, more than twice the rate of US investments overall.

Investors from younger generations are often more attuned to impact investing than previous generations are. Many are interested in making an impact environmentally or socially, but there’s still a considerable dose of cynicism out there regarding the ability for impact investing to return alpha. From my conversations with clients, long-term investors are beginning to understand the concept and are gradually embracing impact investing.

As investors begin to embrace impact investing, it is essential for investors to perform proper due diligence on funds and fund managers. With the increase of funds available, investors must keep in mind past success rates and if the fund can adequately identify ESG issues. The more education and awareness that takes place, the more opportunities there will be for the larger investment community to engage with impact investing opportunities.

Where have you seen impact investing make the biggest strides in recent years?

Climate change and environmental solutions efforts are at the forefront of impact investing. In the US SIF’s biennial Report on US Sustainable, Responsible and Impact Investing Trends, the report found that climate change was one of the top three issues for asset managers and their institutional investor clients in regards to impact investing priorities. Additionally, $3 trillion in AUM is invested in climate change solutions from money managers in 2018 while $2.24 trillion in AUM is being applied towards similar solutions with institutional investors. The focus on climate change among investors certainly reflects the increasing importance of this topic in impact investing and in society in general.

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