Impact Investing: An Interview with Lauren Sercu at Sepio Capital
We sat down with Lauren Sercu, who leads their Impact Investing practice at Sepio Capital, to learn more about how the practice works for clients who want to mission-align their investment assets. Sepio Capital is a Financial Advisory Firm on the Harness Wealth platform.
To start, can you tell us about Sepio Capital and what differentiates you from other advisors?
Our mission at Sepio Capital is to protect our clients’ assets, fortify their legacies, and guard what matters most to them. We accomplish this by having a deep understanding of our clients’ needs and aspirations. We then employ our extensive resources and decades of investment experience to help our clients achieve their goals.
Our differentiation stems from our ability to serve clients well in a customized manner. Sepio Capital was founded on five business principles that drive everything we do:
- Our clients’ interests always come first.
- Relationships of trust are the core of our business.
- We have an uncompromising determination to achieve excellence in everything we undertake.
- We stress teamwork in everything we do.
- We aim to achieve superior results for our clients.
Our core responsibility is to support our clients’ objectives, so seeing how important impact investing was becoming to our clients was an important driver for launching our impact investing platform.
You lead Sepio’s Impact Investing practice. What is that and how does it work?
Sepio’s impact investing practice allows clients to incorporate their values and social impact priorities into their investment portfolio. If clients are interested in mission-aligning their investment assets, we will incorporate an impact objectives discussion into the traditional investment policy setting process.
Broadly speaking, we can employ three primary tools to help clients achieve their values alignment objectives: negative screening, positive tilting, and impact investing.
- Negative screening allows us to build portfolios that exclude companies that might conflict with a client’s values, such as weapons or tobacco companies.
- Positive tilting, often called Environmental, Social, and Governance investing, allows us to invest in companies that do a superior job respecting our people and our planet and maintaining high ethical standards.
- Impact investing generally refers to investing in solutions-oriented companies that are targeting some of our world’s greatest challenges such as climate change or access to quality healthcare and education.
Through a comprehensive values and impact planning session, we are able to determine what tools we need to employ to mission align our clients’ portfolios.
Why did you decide to launch an Impact Investing Platform?
Sepio’s founding team spun out of a large investment bank in order to serve clients in a more customized manner and offer a broader set of resources. Among the reasons for the spin-out was the desire to understand and evaluate the impact landscape in its entirety and build impact portfolios for clients. A number of Sepio’s clients had expressed interest in incorporating their mission into their investment portfolio, including a foundation client who made a monumental decision to 100% mission align the investment corpus.
Our core responsibility is to support our clients’ objectives, so seeing how important impact investing was becoming to our clients was an important driver for launching our impact investing platform. Additionally, investing ultimately comes down to knowing what you own, and we have found that understanding the impact of each investment we make on behalf of clients gives us a deeper knowledge of the fundamental opportunities and risks.
Our impact investing practice is grounded in the same rigorous investment planning and portfolio construction practices that guide the rest of our investment management solutions.
How have clients reacted to it and how does it fit in with their broader financial planning?
Clients who have long had aspirations to incorporate their values and mission into their portfolio are incredibly excited about the ability to incorporate impact into their portfolio. Some clients fall somewhere in the middle, where they might want to explore taking some initial mission alignment steps to see how it plays out. Of course, there are still those who have reservations about impact investing, primarily around whether returns are concessionary in some way. Wherever our clients’ interests in impact investing fall, we have found a conversation around impact to be additive to the financial planning and charitable giving process.
How does your Impact Investing practice differ from offerings elsewhere?
Our impact investing practice is grounded in the same rigorous investment planning and portfolio construction practices that guide the rest of our investment management solutions. Importantly, our clients’ impact portfolios have similar risk-adjusted return expectations and liquidity profiles as our traditional portfolios. For clients who want to achieve solutions-oriented impact, it is important to make sure your portfolio does not get overwhelmed with illiquid, riskier assets. Since the majority of pure-play impact companies tend to be relatively early-stage, these companies are often accessed through public equity funds with a smaller market capitalization or private investment funds.
Our differentiator is the breadth of our impact investing platform, which allows us to optimize a client’s portfolio under a new framework: one that considers return, risk, and impact.
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