The Albert family, the fifth-generation Australian music publishing dynasty that has devoted itself to impact investments, says clearly defining what positive impact means to them helps in their search for new opportunities, in benchmarking performance and in pursuing high returns.
The Sydney-based family behind their 140-year-old music company Alberts has two allocations in its portfolio which have become entirely impact focussed—the Alberts Impact Ventures fund and The Tony Foundation portfolio.
The Alberts Impact Ventures fund invests in ULUU, a carbon-negative replacement plastic made from seaweed; MGA Thermal, stackable bricks which store green energy; Amber, billed as a cheaper way to buy power and a route to 100% renewable energy; Tixel, a transparent event ticketing marketplace; Muso, a booking platform for artists and venues; Like Family, which connects people with verified social carers; Sendle, hailed as Australia’s first 100% carbon neutral delivery service for small businesses; AirRobe, a platform to e-sell, rent and recycle garments in a circular economy; and Gridcognition, software which aims to help energy customers and providers get the best options in a decentralised market.
The Tony Foundation was established by the family in 2012 in memory of fourth generation family member Anthony Alexis Albert, who died unexpectedly in 2000. The family foundation partners with a dozen organisations, including the Australian Children’s Music Foundation, which use music to improve the lives of marginalised youths, young people experiencing mental health and well-being challenges and indigenous youths, by offering grants, loans, advice and networks.
David Albert (pictured above) is the principal of Alberts as its chief executive, with siblings Ingrid, Emily and Kirsty Albert (pictured) as executive directors. The family works with a team of seven professionals (pictured) who are responsible for impact investment strategy, finance and management.
CampdenFBasked David Albert and the Alberts team for their verdicts on the key findings of the new Investing for Global Impact: A Power for Good 2021 research report by Campden Wealth.
A notable 70% of the families, foundations and individuals surveyed told Campden Research the transition to net zero has become “the greatest commercial opportunity of our age” as it represents a chance to benefit from the companies and innovations addressing climate change.
Almost one-third (30%) of global wealth holders are targeting investments that directly support a transition to a low carbon economy, and 24% are seeking to avoid any companies they assess as major contributors to the issue of climate breakdown.
What is your reaction to this change in attitude? Should such private sustainable investors take the lead in the global transition to a low carbon economy?
Absolutely. Global warming is perhaps the most pressing problem facing humanity today. Technology has evolved so much that we are facing the biggest energy transition of our lives as we move from centralised dirty assets—coal and gas—into a distributed green energy network. This entails innovations at the points of energy generation, energy storage, data and systems management and everything in between. This perfect storm creates strong alignment for both commercial returns and positive impact.
Private investors, with their ability to have a long-term investment view, have often taken the lead in new asset classes and climate tech shouldn't be any different.
Those surveyed said they had accelerated their portfolio allocations to sustainable investing, during the pandemic, to an average of 36% in 2020, up from 20% in 2019. The average allocation was predicted to rise significantly to 47% in 2022 and to 54% by 2027.
Is this remarkable increase your experience in your family venture and among your peers and why?
As part of our long term strategic plan, we've been transitioning towards an impact-driven portfolio for several years. We've found it to be a relatively smooth transition and are seeing more peers accelerating their move due to the growing evidence that impact does not come at the expense of returns—and in fact, tends to benefit long-term returns. We have two areas of our portfolio that are now 100% impact. These are our Alberts Impact Ventures fund and The Tony Foundation portfolio. The other areas of the business are currently under review and are transitioning towards impact in line with our strategic impact mandate.
Respondents said that despite market volatility stemming from the pandemic, impact investments proved resilient by delivering solid financial returns in 2020. For most respondents, their returns met (60%) or exceeded (19%) expectations. Of those surveyed, 80% said investors did not have to forfeit financial returns for impact. Additionally, 36% said they engaged in impact because they believe incorporating sustainability considerations into investments will lead to better investment returns/risk projections, up considerably from 24% in 2020.
Have your sustainable/impact investments met or exceeded your expectations and, if so, how and by how much?
Our goal is to not forfeit financial returns for impact. In fact, stocks, with an ESG focus have historically performed higher. We have a theory that businesses who have a purpose-driven reason for being are more values-driven and tend to be higher quality. At the very least, increasing regulation and scrutiny is making it harder for poor actors to perform.
Within our ventures division, we are excited to see the growing number of purpose-driven founders with commercially viable and incredibly impactful businesses.
Almost all respondents said they believe progress has been made in relation to the sophistication of impact measurement/management practices (98%), the availability of professionals with relevant skills (93%) and data on investment products/opportunities (92%). However, the top three challenges sustainable investing is perceived to face in the coming five years include: an ability to demonstrate social/environmental impact (45%), greenwashing (42%) and not having a common language to describe impact performance (38%).
Has such progress been made in your experience? Do you face these challenges and what can be done to resolve them?
There's certainly been progress, especially within the climate investing vernacular. We've noticed carbon measurement and accounting has become far more mainstream and manageable. Where we're seeing challenges is in the other UN sustainability goals that are currently more qualitative e.g. measuring improvements in diversity or mental health. Over time we expect data and expertise to grow and these to become more measurable, allowing shareholders to hold companies more accountable. We have impact metrics in place and agreed on all our impact investments to enable us to track both financial and impact performance which helps ensure we are not investing in greenwashing. Our due diligence process has a demonstration of impact as a first hurdle.
A significant piece of work that we undertook was clearly defining what positive impact means at Alberts and to clearly set out our definition of responsible investing. This has helped as we look at new opportunities and when it comes to measuring the impact that we are looking to make.
A remarkable 80% of respondents said climate change is relevant to their investment portfolios. Awareness of one’s carbon footprint is on the rise, with 25% of respondents now knowing their carbon footprint, up from 19% in 2019. Of these informed investors, 50% consider their carbon footprint when making investment decisions, while 40% use it to actively manage their footprint downwards.
How does knowledge of your family’s carbon footprint influence your investment strategy?
This is very important to us and driving continual improvements across our business and investments is an ongoing piece of work. We were recently awarded BCorp certification and are committed to reducing our environmental and carbon footprint. We try and reduce our carbon footprint in our behaviour and certainly in our investment strategy. Within impact ventures, we are actively investing in businesses reducing CO2 emissions, within our foundation portfolio we have a minimum “do no harm” approach.
Businesses that rely on CO2 emissions are increasingly facing both commercial and regulatory headwinds. Their costs of doing business are increasing, and customer demand for their products is collapsing with the rise of Gen Z and environmental consciousness. Investing without an eye on carbon footprint and the second-order effects of your investments is poor risk management.
Just over half (51%) of respondents believe impact investing and philanthropy would benefit from the use of blockchain technology, pointing to potential benefits for inclusivity, transparency, traceability and credentialism. Additionally, 43% agree blockchain and crypto assets should be used to accelerate financial inclusion.
Do you think blockchain would be useful in impact investing and philanthropy? Do you use or are you considering using blockchain technology in your ventures?
There are certainly benefits in transparency from blockchain technology however, at present, there are also significant environmental concerns from the energy usage of crypto miners. We are interested in the space, but only if it can be done in a sustainable way.
While most respondents (63%) agree impact investing is being driven by the next generation, many (61%) also believe it is now being embraced by the current generation. This is creating, what 57% note to be, a bridge between older and younger generations.
Has that been your experience in your family and, if so, how? How can multigenerational families use impact investing to improve relationships?
The Alberts are in their fifth generation of leadership and can certainly see a push for positive impact from the sixth generation. However, it has been the present fifth generation that led this transition to impact investing through our strategic plan and this change has been embraced by the fourth generation too.
We prefer to see the move to being explicitly impact-focused as an evolution, and on reflection can see that impact and contributing to a flourishing society has always been at the heart of the Alberts way.