family offices

How one family office benchmarks impact and climate investments

'We're giving up a little bit of return for a lot of impact,' Adirondack Capital Managers managing director Caitlin Haught told NPM.

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For many wealth managers, impact still means concessionary returns – but that is no deterrent for their investing.

One such investor is Adirondack Capital Managers, the single-family office for the Boston-based Coghill family, which derived its wealth from real estate and private equity investments. Most of its assets are currently invested in a broadly diversified, market-rate return-generating portfolio, managing director Caitlin Haught told New Private Markets at impact investing organisation ImpactPhl‘s summit in Philadelphia last week. Haught also manages a climate ventures sleeve and a social impact sleeve for Adirondack.

On benchmarking the financial performance of these climate and impact sleeves, Haught said: “My climate venture fund stacks up to my traditional venture fund in my corpus. I have data that proves that out every quarter.”

The social impact sleeve is “impact first”. Instead of providing grants or charitable donations, the family office aims to recycle the capital to maximise its impact, said Haught. “We’re giving up a little bit of return for a lot of impact… I stack [those investments] against a grant, which is a negative 100 return in my portfolio. So even if it’s 0.7 [percent return], it’s better than a negative 100 grant.” For example, instead of “buying one family a house… we can figure out how to get that family a mortgage and then reinvest that to help a second family buy a house”.

The family office, established in 2020, is moving towards a total-portfolio impact approach, said Haught. Of the assets in its main portfolio, 22 percent are aligned with impact.

Other investors and managers at the conference echoed these comments about an appetite for below-market returns in pursuit of impact. UBS’s US co-head for social impact and philanthropy Jamie Sears, for example, said wealth inheritors among her clients are showing interest in “investing along a continuum: philanthropic capital, impact-first investing and [market-rate] impact investing”.