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FINANCE| 11.19.2020

The role of the institutional investor in impact investing

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Socially responsible investment is in a stage of constant growth. It’s now no longer enough to market financial products that meet environmental, social and governance (ESG) criteria –measuring the impact of those investments is also necessary.

MAPFRE is a good example of a company doing just that. MAPFRE AM, the company’s fund manager, recently reached an agreement with Global Social Impact (GSI) to launch its first social impact fund, and in turn, this awareness is being transferred to the balance sheet and the investment process in its entirety.

Alberto Matellán, MAPFRE Inversión’s chief economist, participated this week in The Role of the Institutional Investor in Impact Investing, an event organized by SpainNAB and SpainSif. He explained that a group of MAPFRE’s scale finds itself conditioned by three issues when considering transferring all its investments to impact investments.

Firstly, MAPFRE is a large asset holder. Secondly, it uses a co-investment model, whereby it invests invest where its clients invest, and as an insurer, the company must comply with very strict regulatory conditions. Thirdly, there is the question of scale. “We manage assets worth close to 50 billion euros, so transferring everything to impact investment is a complex process that has to be done progressively,” said Matellán. Despite these difficulties, the results are very positive and “both our teams and our clients are increasingly aware that impact investing is the way to go.”

Matellán highlighted that MAPFRE, in addition to putting products on the market, is carrying out important research work, as illustrated by the agreements it has in place with the Universities of Siena and Cranfield. On top of that, the company has just launched the MAPFRE Sustainable Finance Observatory, which aims to become a forum for academic institutions with whom the insurer can promote the development of financial, insurance and pension instruments that meet socially responsible investment criteria.

The experts who participated in the event considered the role that regulation should play in promoting greater awareness in this regard and facilitating a broadening of the impact investment products on offer. For Matellán, in the eyes of the institutional investor, “regulation has to provide support, but it is important that this support comes through incentives.”

It is not just institutional investors who are showing interest in the area of impact investing – retail investors seem keen to get involved too. “We have a very large sales network that is in direct contact with the client and what they are telling us is that the client, in general, is not fully aware of what exactly social and impact investing is, but once it’s explained to them, they react positively and are keen to invest.” adds Matellán.

To promote the commercialization of these products, it would make sense to standardize the quality seals or certifications that endorse them. In France they are very advanced in this regard and, in fact, as Matellán recalls, several of the MAPFRE Luxembourg SICAV funds are in the process of obtaining one of these seals. However, according to the economist, “there should be a European seal, principally for companies like MAPFRE that intend to roll out these products in all the countries it operates in.”