PART 2
Exploring the Landscape
The Spectrum of Capital framework helps us visualise our allocations
There was no one person, product, or service that would provide a portfolio working right across the spectrum at our level of net worth. Rather, we would require advice and information from many sources: all of whom use different terminologies, timelines, products, and approaches to the same end - putting our money to use for a ‘better world’, as we defined it. Equally, we ran into daunting and difficult hurdles. However, more often than not, we found people very willing to help, even if they couldn’t provide what we wanted. These conversations not only deepened our understanding of how our finances worked, but also how seemingly disparate issues are intertwined.
THE LANDSCAPE
Explore the spectrum’s three broad areas – traditional wealth management, impact investment and philanthropic giving – through a sustainable finance lens.
Primary Focus: Generating financial returns and preserving capital for individuals, families, and institutions.
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Objectives: To grow wealth, manage risk, plan for financial goals (like retirement or education), and potentially transfer wealth to future generations.
Approach: Involves analysing financial situations, setting financial goals, developing investment strategies (diversification across asset classes like stocks, bonds, and real estate), and ongoing monitoring and adjustments. The success is primarily measured by financial performance.
Primary Focus: Generating positive, measurable social and environmental impact alongside a financial return.
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Objectives: To address pressing global challenges (e.g., climate change, poverty, inequality) while also achieving financial sustainability or profit.
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Approach: Involves intentionally investing in companies, organisations, and funds that aim to create specific positive impacts. This requires defining, measuring, and reporting on both financial and impact outcomes. Returns can range from below-market to market-rate.
Primary Focus: Contributing to the well-being of others and addressing societal problems through voluntary giving of our capital resources (not just our money).
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Objectives: To support charitable causes, promote social good, and create positive change in areas of social and environmental need, cohesion, or transformation.
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Approach: Typically involves making grants or donations to non-profit organisations or directly supporting charitable activities. The primary measure of success is the positive social or environmental outcome achieved, rather than financial return for the donor.