An interview with Damien Lardoux, EQ Investors
There’s always a purpose behind financial investments. What’s yours?
Is it performance alone? Or maybe it’s preserving your wealth for the next generation. Or maybe you want your investments to reflect your values.
Often clients will have strong feelings about investments in Tobacco, Armaments, Alcohol and Gambling – and Magenta is very proud to have always offered an ethical and sustainable investment offering. However, in the past, access to investment solutions have not been mainstream, accessible to those with large amounts to invest, with higher risk appetite.
In the last 4-5 years this has ALL changed. More and more we are asked about alternatives to traditional investment approaches, wanting to both make money, but make a difference – with investments made in line with people’s values.
As a member of the UK Sustainable Investment and Financial Association – Magenta is a strong advocate that sustainable and ethical investing can offer significant diversification to a well-balanced and managed portfolio – for anyone!
In this blog, we are interviewing Damien Lardoux, head of Impact Investing at EQ Investors – to try to debunk some myths and understand more about his specialism and passion for all things sustainable.
Questions for Damien Lardoux | Head of Impact Investing | EQ Investors
Tell us a little about yourself
I am the Head of Impact Investing at EQ Investors and Lead Portfolio Manager for the EQ Positive Impact and Future Leaders Portfolios. After working for a few years for an American Investment Bank in Paris, I came to the UK about 8 years ago for personal reasons and joined EQ Investors, a boutique wealth manager which had the ambition to redefine the concept of ethical investing. Focusing up first on the doing good before looking at the avoiding harm has been an eye-opening journey for me and for the numerous clients that have decided to invest in our proposition.
I am the father of three young girls and I am doing my very best to help them thrive between two rich cultures, British and French. I am also willing to educate them to the butterfly effect and make them realise the impact of every single of their action on society and the environment.
What messages did you learn or hear about money when you were growing up?
Where I grew up in Brittany, we are well-known for being thrifty, so the importance of saving money has been repeated a number of times during my childhood. They also insisted heavily on the importance of putting education first to allow me to realise my goals and even dreams later in my life.
I am really grateful that they allowed me to discover the concept of investments and the stock markets while I was a teenager as it became a passion for me.
Were you encouraged to be ‘green’?
Not in the way we mean it now, more around the principles of avoiding wastage for example. 20 or 30 years ago, climate change was not taught at school, was rarely discussed in the media and environmentalists were described as extremists, so I can’t really blame my parents for not encouraging me to be “green”. Consumerism was the prime ideology at the time and the planet seen as an unlimited provider of resources. With the knowledge we have today about climate change, there is now clearly a duty for teachers or parents to strongly encourage environmentally friendly behaviours.
How did you choose this as your career?
In 2011, I was very lucky to meet some passionate people at EQ Investors helping to make a positive impact in Africa and other parts of the world. Working at that time for a big bank where the mission statement was all about profit, I loved the concept of sustainable investing and decided to cross the channel and embark on what has been a fantastic journey.
What is sustainable investing?
Sustainable investing is about investing in progress and supporting companies that are developing solutions to the world’s biggest social and environmental challenges. Those companies can be best positioned to grow and make an attractive investment strategy.
Is sustainable investing different to ethical investing?
Sustainable investing is very different from the traditional way of approaching ethical investing. For decades, ethical investing has focused on screening out the most controversial sectors like tobacco or armaments while paying little attention to the good that the invested companies were making.
Sustainable investing seeks out those companies making a positive impact and the negative screening is often a by-product of this positive investment approach. It can be described as ethical investing 2.0
How do you think the opportunities available to everyone for this type of investment have changed in the last 5 years?
Sustainable investing used to be a relatively niche way of investing, but this is no longer the case. The investment universe is now quite large and the potential for growth high meaning that a number of asset managers have launched funds across all asset classes over the last 5 years. As a result, investment managers can build well diversified portfolios meeting different risk and return requirements from individual investors.
There are a number of things that people will we often hear said about sustainable investing which may put them off – for example, that you sacrifice investment returns or that you can’t measure ‘impact’ – what’s your view on these views/opinions?
Sustainable companies are those that have turned the largest societal challenges into profitable business opportunities. These companies benefit from the growing global demands for their products and services, greater regulatory support and from avoiding reputational and stranded asset risks.
Albeit a shorter track record versus traditional investing, market evidence demonstrates that sustainable investment can produce market rate returns or above. For example, the EQ Positive Impact Portfolios have outperformed their conventional benchmarks since their launch eight years ago.
We would encourage any investor to discuss those elements that can put them off with their financial adviser. There are indeed many myths around sustainable investing which are worth being busted.
Tell us more about the 17 UN Sustainable Goals and how you use these to measure impact of the EQ portfolios?
The United Nations’ 17 Sustainable Development Goals represent a global framework for action to solve the most urgent and challenging needs of society and the environment. The EQ Positive Impact Portfolios use the Goals as a framework to categorise impact investments based on their core business activities (products, services). Not all the goals are equally investable, but we nevertheless focus on opportunities that either benefit people, planet or both.
By mapping our portfolios to the UN Goals, we allow investors to better understand how their investments are helping to make a positive contribution to the world’s most pressing issues. For the impact calculator, we also measure the positive contribution that each company is making through their core products and services by reviewing about 100 different indicators directly linked to the Goals.
If you were a new investor, who wanted to invest in something that produces positive financial results and social good, what 5 questions do you think you would ask your financial planner or investment manager?
I would probably ask the following questions:
Can I invest all my savings in a sustainable portfolio?
Is the investment solution focusing on exclusions or on companies developing solutions to the world’s problems?
How important is climate change mitigation for this investment solution?
Would you be able to show me the impact that my investments make?
How important is sustainable investing for your company? And explain why.
What are you most proud of as head of impact investing at EQ?
Whilst there is still a long way to go, I am particularly proud with the company’s effort to spread the word on sustainable investing and allow a growing number of individual investors to truly align their investments with their values!