6 minGenerating a double impact without financial compromise: lessons learned from an ambitious project
Two years after the creation of the Double Impact range in collaboration with FFG, and just after the migration of our flagship SRI fund to this range, Annick Drui, Fund Manager of the FFG-BLI Global Impact Equities Fund, shares with us her strong belief in this innovative approach.
Can you give us a brief reminder of the distinctive features of this ‘Double Impact’ range?
This range is the fruit of a partnership between BLI and the Belgian specialist Funds For Good (FFG), whose mission is to generate local and direct impact. By working together, we are pooling our expertise to offer investors who want to grow their capital responsibly a range of impact investment funds. These funds have a robust investment process and combine two highly complementary types of impact: intra-investment impact through the selection of companies whose activities are aligned with the United Nations Sustainable Development Goals (SDGs), and post-investment impact through FFG's use of a portion of the management fees to provide financial and coaching support for entrepreneurs who are in precarious employment situations or who have a project with a social or environmental dimension.
Find out more about this partnership
As a fund manager, I find this partnership inspiring and uplifting as it strengthens the impact-generation capacity of our portfolios. While we firmly believe that our investment methodology and impact analysis offer investors added value through our focus on the SDGs, we cannot ignore the fact that because we invest in the secondary market, our impact is inevitably indirect. However, by combining our approach with FFG's more tangible action, made possible by sharing a proportion of our management fees, we can really enhance our effectiveness.
In the year since your fund joined this scheme, what lessons have you learned? Has this change affected the way you manage your portfolio?
The main operational impacts of integrating the Fund into the ‘Double Impact’ range were the change of name (from BL Global Impact to FFG-BLI Global Impact Equities1 ) and an adjustment to the fee structure.
However, the fund's day-to-day management has not been affected by its inclusion in the Double Impact range. Investors continue to benefit from an approach rooted in BLI's long-standing investment philosophy of Business-Like Investing that puts the emphasis on active, conviction-based management, geared towards the long term and the search for quality companies.
You could even say that, by adding a second source of impact, this partnership gives us greater flexibility in the way we construct the portfolio, since we don’t have to compromise on the financial quality of the companies we select in order to strengthen the portfolio's impact characteristics.
Could you explain this last point?
SFDR regulations and label requirements have led to Article 9 funds concentrating on niche companies with very marked impact profiles, but whose financial fundamentals are not always up to scratch. Similarly, we have also seen many funds concentrating on very specific themes (environment, water, renewable energy, etc.), which narrows their level of diversification and poses a big financial risk for investors if these themes fall out of favour on the markets.
From the outset, well before we set up the partnership with FFG, we designed our investment approach to have latitude, with a multi-thematic perspective that would enable us to make optimum use of the interconnections across the various SDGs and to achieve greater diversification in our portfolios.
The complementarity we gain from FFG’s direct and local impact therefore enables us to provide investors with solid impact generation while avoiding an overly restrictive approach within the portfolio that could undermine its risk-return ratio.
Does this mean that you compromise on the impact profile of the companies in your portfolio?
No, far from it! All the companies included in our impact portfolios are subject to a 5-pronged impact analysis: revenue, reach, quality, potential and corporate culture. Impact generation is therefore a key criterion for investment. However, it cannot be the only reason. We do not intend to compromise on our long-standing criteria of quality fundamentals and valuation in the name of impact generation.
How have this partnership and the new range been received?
This range was created relatively recently and coincided with a time when investors’ enthusiasm for SRI funds had gone off the boil.
However, the complementary nature of the two impact dimensions is attracting investor interest.
Especially as investors have the opportunity to meet entrepreneurs financed by FFG during ‘Impact Days’ or other events organised by FFG.
These interactions mean we can showcase the concrete impact of FFG's work and, above all, feel the positive energy generated by this ecosystem.
More specifically, in recent months we have had discussions with several institutional investors who are persuaded by our approach, particularly in the context of the creation of SRI funds of funds geared to Article 9 strategies.
To my mind, these expressions of interest and the launch of this type of funds of funds show that SRI investing is not dead, it is just evolving, and I am convinced that our approach has a real place in this process of change.
We are working hard to make our approach understandable and to this end we recently published our first impact report, in which we describe our approach, provide objective evidence of the impact generated within our portfolios, and highlight concrete examples of the complementarity between intra-investment and post-investment impact. We hope that this type of initiative will give investors a better understanding of our combined approach.
From a more personal perspective, what does your involvement in this partnership bring you?
The partnership between BLI and FFG has been in place for over ten years now. Even before it stepped up a level with the launch of the ‘Double Impact’ range, I was already convinced of the relevance of their initiative.
I also think that, to a significant extent, this partnership endorses the competitive advantages we seek when it comes to investing. The expertise of our two companies is highly complementary: BLI in terms of active management and FFG in terms of finance and support for small entrepreneurs. Both entities enjoy strong brand recognition (intangible assets) and have expertise and innovation capabilities that have enabled us to develop this unique range of funds. The next step is to develop the network, spread the word and capitalise on the track record we have built up over the last three years.
Overall, I am very enthusiastic about playing an active role in this project. I look forward to finding new investment candidates for the fund and sharing with our investors the inspiring stories of the entrepreneurs we support. Visiting them and hearing about their lives while enjoying a delicious lunch or buying gifts for the family in craft shops and seeing how people’s lives are changing is really very motivating in a sector (like finance) that can sometimes seem rather removed and set in its ways.
1 Change effected on 25 March 2024 when BL Global Impact migrated to the FFG-BLI Global Impact Equities sub-fund.
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