Businesses that incorporate “material environmental, social and governance (ESG) factors into their strategy, operations and culture will outperform [others that do not] over the long term,” is the underlying philosophy at New York City-based Inherent Group, a family office that manages equity and debt investments.
Two factors lie at the core of Inherent’s investment philosophy, said Tony Davis, the firm’s founder and CEO: “One, a desire to figure out how do we do good while investing our money, and secondly, the excitement around the ability for business to address some of these challenges.” Inherent’s website states that such businesses are also uniquely positioned to address environmental and social challenges through innovation, operational excellence and sustainable advocacy. It invests in businesses in power generation, clean water, transportation, education, sustainable agriculture and healthy food.
When Annie Chen started out nine years ago to manage a part of her family wealth, one question in her mind was: “What’s the purpose behind having wealth, and how can we really use it in a more proactive and purposeful way?” Chen is the founder and chair of RS Group, a Hong Kong-based family office, whose website notes that it wants to “build a global community where social progress and economic development occur in harmony with nature.” In an effort to answer her own question, she eventually began “investing in social enterprises that had a mission to produce positive social or environmental impact.”
Davis and Chen shared their perspectives on the guiding principles for investing in ESG-driven companies with Knowledge@Wharton for a new podcast series called “From Back Street to Wall Street.” The series is being produced in partnership with Impact Investment Exchange (IIX), a Singapore-based organization that works to serve as a bridge between investors and development goals in Asia.