“Don’t give up what’s important to you just because it’s not easy” (Albert Einstein). Impact Investing, Asset Allocation, Financial Education – Markus Hill spoke for FONDSBOUTIQUEN.DE with Peter Brock, 4L Capital AG, about the current challenges for investors in the field of impact investing. Topics such as greenwashing, single-family offices, the federal initiative Impact Investing (BII), and “Diversity & Connecting the Dots” were addressed as well as bicycle races and music.
Hill: How important will impact investing become in asset management?
Brock: Impact investing, in general, should become the “new normal” for all investors. The earth’s important problems, climate change, but also issues such as advancing population growth and migration, must also be brought to a solution with capital – it is already known to be 5 to 12, if not later. The 17 Sustainable Development Goals of the United Nations, SDGs, with their respective sub-goals define these financing gaps very precisely. Only impact investing can make a real positive contribution to solving these goals in the real economy. ESG investing is not enough. It avoids a few “harmful business practices,” but by itself, it does not make a positive environmental or social contribution to improving the world. Impact investing will, therefore, in my view, increase and – after a period of much green or impact washing – hopefully eventually be taken seriously by all market participants. At this point, I would like to emphasize once again that we, the 4L Impact Family, condemn green- and impact-washing. As a 100% Impact Investor, the Family Office 4L Vision GmbH and also the Impact Asset Management 4L Capital AG is the spearhead in “Deep” Impact Investing – As a Family Office we can afford this and want to cause more private (of course also institutional) capital to flow in the right direction. We value transparency and also support public discourse on the topic with Impact Investing Magazine (www.impactinvestings.de). In the family office sector, you often find an engaged discussion on how best to enter into specific impact investments that meet the high demand for returns and impact at the same time. We are positioned here and, based on our expertise, we also promote our special know-how and our products/services in the “Verbund”. With 4L Capital AG, we offer access for interested parties to impact investing investments in all asset classes – from liquid equity portfolios to our global 4L Capital impact equity fund (an Art. 9 funds), to illiquid corporate and venture investments or impact venture funds.
Hill: How do you view impact investing in general at the moment, where can we go from here?
Brock: Impact investing is much more prevalent in the Anglo-American region. There are many reasons for this, first and foremost the welfare state is set up differently and also financed differently. In Germany, philanthropy, with its very broad foundation landscape, has a very special status. In our country, we still need to convince people of the value of true impact investing, and the ecosystem needs to be strengthened. Market participants such as the 4L Impact Family, but also the Bundesinitiative Impact Investing (BII), for example, are doing a lot to ensure that supply and demand are linked with professional intermediaries. I chair the BII’s Family Office Working Group to set up more lighthouse projects there as well and to promote a marketplace for impact investing. In this case, I am primarily concerned here with venture capital issues, which certainly fundamentally enable the highest impact. Where is the journey going, I would like to speak for us, not for the industry as a whole. Together with 4L Capital and other partners, we are currently considering launching an impact venture fund-of-funds to facilitate access to impact venture funds as well, as to diversify, and increasingly enforce professional standards in the impact sector. Last but not least, to stop the impact-washing!
Hill: What is the importance of financial education in the impact investing segment?
Brock: In my opinion, financial education is fundamentally and severely neglected in the education of children and young people. Interestingly, neither in schools nor at universities do pupils learn much about how to manage their (private) assets. – Financial education is therefore very important to transfer private, entrepreneurial wealth to the next generation in a sustainable way. Today, more than ever, it is required of the NextGen not to earn the capital with “bad” business practices and then philanthropically give it back to society in a small part at the end. Many NextGens take a fundamental sustainable approach to “making money” and also donating. Impact investing is particularly important in this regard. As part of a strategic philanthropy approach, investments with capital preservation and even a financial return, as opposed to donations, allow capital to be permanently invested to support sustainable projects. Donations, on the other hand – which certainly continue to have their uses in many situations – can only be used once. Impact investing typically pursues long-term projects or ventures that are also commercially sustainable and that pay for themselves over time, thus creating a lasting impact. Again, I apologize here for advertising on my behalf, of course, there are many other interesting players in the educational landscape of “finance”. My start-up (www.BeeWyzer.com) is dedicated to showing the next generations of wealthy entrepreneurial families how to successfully structure and sustainably transfer larger assets to the next generation. By looking at all the assets (family business, private capital, but also human and social capital and “family value”) and structuring and managing them using best practices.
Hill: Diversity is a big buzzword today, and this can also be related to interests. You are active in many fields. In which areas are you active and where exactly do these activities come together?
Brock: I’ve been freelancing for about four years, since my career ranging more than 25 years in large financial institutions in the UK and Germany, very recently also at EY Ernst & Young. My freelancing outside of large organizations allows me to have “lots of balls in the air”, which is great fun and continues a career external of fixed guardrails. In my case, this means focusing primarily on family offices – for example chairing the investment committee of a Swiss family office. In my main job, I am Managing Director of the Impact asset management company 4L Capital AG and Investment Director of the single-family office 4L Vision GmbH, to follow my passion to use more – especially private – capital to make the world a little better – as we all know, the time is ripe for that! Besides Impact and Family Offices, with my startup in the education sector, I was particularly interested in pouring my diverse experience with Family Constitutions and Strategic Asset Allocation into a scalable learning experience, so that as many entrepreneurial families as possible can benefit from “keeping their assets together” and thus maintaining remarkable “Family Legacies” in the future. Connecting the dots – the common thread of everything I do is to manage family wealth in a particularly sustainable way, all my activities focus on that goal.
Hill: When you’re not involved in impact investing and BeeWyzer – what is your heart wishing to do in your personal life?
Brock: I’m not a great athlete, but have always enjoyed tennis, mountain hikes, and skiing. However, after my knee injury, I shifted my sporting interest to road cycling… now and then a race or a longer tour, combined with the start of the season on Mallorca – that’s great fun and keeps one fit when otherwise you’re always sitting at the computer. I’m also very interested in music, ever since my school days as a mediocre trumpet player in Duisburg orchestras and brass bands – I like listening to everything from jazz to classical music!
Hill: Thank you very much for the interview.
Peter Brock, Managing Director of Impact Investing Media GmbH, has been an authorized signatory of the impact asset management company 4L Capital AG since April 2021 and has also been an investment director for the single-family office 4L Vision GmbH since April 2020. In this context, he is one of the co-founders of the federal initiative Impact Investing e. V., where he leads the working group Family Offices.
4L Capital AG: www.4l.capital
Bundesinitiative Impact Investing: www.bundesinitiative-impact-investing.de
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