Starting Your Family's Sustainable Investing Journey Part 2: Where Do You Want To Go?

Setting your sustainable investing ambitions and aims

“If you don't know where you're going, any road will get you there” , as the Cheshire Cat wisely tells Alice in Alice in Wonderland. This advice applies equally to investing. Without clear intentions, your investments will still produce an impact, just not necessarily the one you desire.

The global challenges facing our planet are too numerous and complex for any single individual, organisation or government to address alone. Yet your investments either contribute to these problems or help solve them. Building on your motivations from Article 1, effective sustainable investing is about knowing where you want to go.

In this second article, we explore:

• What are your sustainable investing ambitions and aims? And how would you set them down?
• How can the UN Sustainable Development Goals (SDGs) support your sustainable investing?
• What approach(es) can you take to focus on specific themes or issues?

Charting your sustainable investing journey

Your family’s sustainable investing journey offers many possible destinations as well as routes there. Navigating them well requires clear ambitions and aims for your portfolio.

Ambition: Articulating your vision

Every investment portfolio exists within the broader context of our personal aspirations for our lives. Setting an ambition for your wealth means expressing your vision for the future and what impact you want your portfolio to have on the world.

We generally see this starting with personal introspection: Why is your wealth important to you and your family? What world do you wish to see, and what influence should your capital have in creating it?

Consider a practical case. You and your family care about nature and the environment. You’re concerned though about the impacts of climate change. You recognise governments are struggling to meet Paris Climate Accord commitments to limit global warming to 1.5°C. Simultaneously, you can see your portfolio’s potential influence and want to actively invest into climate mitigation and adaptation solutions. Your ambition might therefore be to contribute to a healthy, regenerative environment.

Aims: Setting a course

While ambition provides your vision of the future, aims establish how you intend to create it. They convert abstract aspirations into concrete guidelines for portfolio management and changes. They create standards by which to assess your current position and forward progress.

To avoid becoming overwhelmed, establishing a timeline with distinct phases for implementing new approaches or portfolio changes can be helpful. Consider how your ambition might extend beyond your portfolio to your philanthropy or family business, if applicable, amplifying your potential impact.

Returning to our environmental case, several distinct aims could be set for the same ambition.

• You might establish an ongoing review process to minimise the greenhouse gas emissions in your portfolio.
• You might go further, pursuing a “Paris Aligned” portfolio with an investment strategy consistent with achieving the goal of global net-zero emissions by 2050.
• Alternatively, you might deliberately invest into hard-to-abate, high-emitting sectors in ways to accelerate their transition, acknowledging this might mean a higher level of portfolio emissions.
• You might focus on exercising your ownership rights to engage your portfolio companies to reduce their emissions. 

While the environmental ambition remains constant, implementation approaches vary substantially. Professional investment advice becomes essential here, as these aims also should align with your core motivations from Article 1 and other portfolio objectives or constraints like risk tolerance, liquidity needs, or return targets.

If you aren’t already clear on specific themes or issues for your investing, the SDGs provide a useful framework.

Adopted in 2015, the SDGs represent a universal call to action to end poverty and protect the planet. They comprise 17 interconnected goals covering environmental, social, economic and governance themes.

(Figure 2) (Source: https://sdgs.un.org/) 

While typically presented individually, they cannot and should not be considered confined to their own ‘boxes.’ These goals are highly interrelated and can be grouped to create wider systems change.

Some investors naturally gravitate towards one, or a few, SDGs. At CSP, to simplify from 17 goals, we can group them into three primary themes.

Environmental goals

Environmental goals feature prominently in the SDGs. The Paris Agreement’s aim to target 1.5°C of global warming has made climate action globally visible. Yet environmental challenges extend beyond climate change to encompass various natural and biological ecosystems.

The five primarily environmental goals include:

• Goal 6 - Clean Water and Sanitation
• Goal 7 - Affordable and Clean Energy
• Goal 13 - Climate Action
• Goal 14 - Life below Water
• Goal 15 - Life on Land

Social goals

The SDGs emphasising social goals highlight key challenges facing humanity. Their intention is to improve quality of life, social cohesion, and promote social justice. Their focus can be in specific locations or across wider communities.

The six primarily social goals include:

• Goal 2 - Zero Hunger
• Goal 3 - Good Health and Well-Being
• Goal 4 - Quality Education
• Goal 5 - Gender Equality
• Goal 10 - Reduced Inequality
• Goal 11 - Sustainable Cities and Communities

Economic and governance goals

Economic goals focus on sustainable and inclusive economic growth, promoting prosperity without compromising environmental or social well-being. Linked to these are governance goals, which focus on improving strength and resilience of institutions and partnerships.

The six primarily economic and governance goals include:

• Goal 1 - No Poverty
• Goal 8 - Decent Work and Economic Growth
• Goal 9 - Industry, Innovation and Infrastructure
• Goal 12 - Responsible Consumption and production
• Goal 16 - Peace, Justice and Strong Institutions
• Goal 17 - Partnerships for the Goals

The strategic value of the SDGs

Though not explicitly designed for investors, the SDGs offer highly useful framework for sustainable

investing.

First, they convene and coordinate global effort by establishing common language for cooperation across

investors, companies, NGOs, and governments. They also provide banners beneath which communities

rally action.

Moreover, they can support novice sustainable investors begin impact measurement and management.

Each of the 17 goals has underlying targets and metrics to provide guidance on what outcomes and

objectives investments or portfolios can have.

Most importantly for families or organisations, they offer a simple framework to share, talk and align about

what you care about. With this you can take action, such as communicating with wealth managers about

your preferences, finding partners with shared interests, or identifying and assessing opportunities.

Determining the themes that matter to you

We all care about something. The issues that truly matter to you or your family are recognisable by your willingness to commit financial, social, and personal capital towards addressing them. Several approaches can help you to identify where to focus:

• Review your current activities: Examine ongoing efforts and underlying issues that already resonate, particularly related to existing family philanthropy or foundation.
• Assess the family business: Identify themes related to any existing family operating business, in terms of sector, operations, or impact of goods and services. These may create synergies, derisk sustainability challenges, or provide strategic alternatives.
• Consider your family history and legacy: Your family’s experiences may inspire focus areas through discussions with older generations or exploring your family’s story. Themes may also emerge during intergenerational wealth transfer planning centred on family values and priorities.
• Reflect on the SDGs: Review the 17 goals, or three groupings, to see which one(s) resonate most strongly with you, your family, or organisation. Facilitated exercises can also help to identify, prioritise, or combine thematic areas.
• Take an analytical approach: Rather than starting with personal connection, employ a calculated or diagnostic approach. Scientific frameworks like the nine Planetary Boundaries developed by the Stockholm Resilience Centre or calculations of how your capital can maximise positive benefit can help identify focus areas analytically.

By establishing clear ambitions, specific aims, and focused themes, you can transform sustainable investing from an abstract idea to a concrete strategy – enabling your wealth to contribute to the future you wish to create.

Voices of experience

Over ten years, CSP has trained over 240 participants in the Impact Investing for Next Generation programme. We have seen that when investors express their ambitions and aims linked to the SDGs, it can prove especially valuable, especially for cross-generational understanding. (This also can also enable families to communicate, connect, and commit as we’ll explore in Article 4.)

To bring this to life, we interviewed CSP alumni Carissa He about her experiences.

Carissa’s perspective:

At the intersection of impact and family legacy, Carissa has charted a distinctive path in business leadership. Originally establishing herself through a sustainable fashion venture, she has now returned to her family business with a clear mission: transforming traditional business models for positive impact.

She spearheads the company's sustainability strategy and climate transition planning, while simultaneously building an impact investment portfolio within the family office. Her journey reflects a thoughtful navigation between forging her own entrepreneurial path and leveraging her family's established resources - consistently seeking opportunities to drive meaningful change while balancing her vision with the values of the family.

“Our family cares about investing within the verticals of our core business for impact. However, we may speak different languages and terminologies as next generation and with our parents when it comes to impact. We need to communicate to realise it.

Once, I was having a conversation with my dad, when I had just got into the family office side of things. My dad was telling me how he invested in something in electrification of transportation and the EV battery space. However, he did not see it as impact investing, as he came from a financial lens and saw it as more like an innovation to bring financial returns to the business. In contrast, I saw this as impact investing or at least investing in our business for impact in green technology.

In addition, for family impact, we are also happy to donate to schools or contribute to the society that we grew up in.”

Reflection questions: Setting your destination and path

Building on your motivations from Article 1, consider these questions to identify your sustainable investing ambitions:

• What themes or issues really matter to you? Your family? Your organisation?
• In your ideal future world, what influence have your investments or portfolio had?
• What actions can steer your portfolio to help contribute to that future?
• What guidelines will help guide your investment process or decision-making?
• Over what timeframe or phases do you want to implement these changes?

Review the summaries of SDGs below and note which resonate most strongly. Reflect on your previous experiences to identify themes that have drawn your attention. Consider allocating 100 points across categories, and/or the underlying SDGs, to determine which ones are primary, secondary, or less relevant goals.

Environmental goals:

• Goal 6 – Clean Water and Sanitation: Ensure availability and sustainable management of water and sanitation for all.
• Goal 7 – Affordable and Clean energy: Ensure access to affordable, dependable, sustainable, and modern energy for all.
• Goal 13 – Climate Action: Take urgent actions to combat climate change and its impact.
• Goal 14 – Life below Water: Conserve and sustainably use the oceans, seas, and marine resources for sustainable development.
• Goal 15 – Life on Land: Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, halt and reverse land degradation and biodiversity loss.

Social goals:

• Goal 2 – Zero Hunger: End hunger, achieve food security, improve nutrition, and promote sustainable agriculture.
• Goal 3 – Good Health and Well-Being: Ensure healthy lives and promote well-being for all at all ages.
• Goal 4 – Quality Education: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
• Goal 5 – Gender Equality: Achieve gender equality and empower all women and girls.
• Goal 10 – Reduced Inequality: Reduce inequalities among and within countries.
• Goal 11 – Sustainable Cities and Communities: Make cities and human settlements inclusive, safe, resilient, and sustainable.

Economic and governance goals:

• Goal 1 – No Poverty: End poverty in all its forms everywhere.
• Goal 8 – Decent Work and Economic Growth: Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
• Goal 9 – Industry, Innovation and Infrastructure: Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation.
• Goal 12 – Responsible Consumption and Production: Ensure sustainable production and consumption pattern.
• Goal 16 – Peace, Justice and Strong Institutions: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable, and inclusive institutions at all levels.
• Goal 17– Partnerships for the Goals: Strengthen the means of implementation and revitalise the global partnership for sustainable development.

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