Pangea Impact Investments seeks to attract clients looking for a home for their pensions, who have qualms about the ESG offering of major providers and want to invest in an “entirely positive impact portfolio”.
Pangea Impact Investments, which launched last week, is the latest small company aiming to dent the hegemony of large pension providers by providing an alternative for retail investors based on a positive impact investment strategy.
Pangea’s founder and CEO Nick Stoop, an investment manager who formerly worked for BlackRock, says Pangea is the first wealth management provider for individual clients in the UK whose investment strategy is completely aligned with positive impact.
The platform is targeted at those seeking homes for their pensions, who have qualms about the overall spread of investments offered by major providers that invest in environmentally and socially harmful companies, even if they do also offer positive impact products.
“Question marks are being raised around the authenticity of asset managers operating in this space when they’re also operating across the fossil fuel industry, fast fashion, tobacco and so on. If you have wanted to invest in an entirely positive impact portfolio, whose underlying asset managers are entirely dedicated to the positive impact space, you haven’t been able to find that in the UK,” Stoop told Impact Investor.
He said Pangea would be scrupulous in researching potential investments in products offered by asset managers to confirm that their underlying strategy conforms with its own definition of positive impact.
“We will ensure they are true to label, which means the underlying businesses are focused on positive impact by investing in solutions for environmental change and reducing social inequality more broadly. So, Impax, Triodos and WHEB are examples of the types of managers we will invest with,” he said.
The company is a Pending B Corporation – which means it aims to become a B Corp when it has been trading long enough to qualify – and a member of 1% for the Planet, whose members decide to give 1% of their revenues to environmental causes, whether they are profitable or not, in a drive to eliminate greenwashing.
Such impact-related solutions for retail investors have been slow to emerge, with impact investment opportunities thus far overwhelmingly targeted at institutional investors and top-end wealthy individuals. As Impact Investor reported in March, the industry is now working on developing investment apps and platforms for a potentially huge retail market, offering individuals access to investments that combine returns and impact.
Impact plus returns
Stoop thinks Pangea can match the returns offered by the wider market as well as fulfilling its positive impact remit.
“I don’t think I’m putting my neck on the line by saying that, if you look at positive impact strategies across equities, and also increasingly across the bond space, their relative returns over 10 or 20 years have been as good as their more traditional counterparts in some cases,” he said.
Pangea is launching with 25 individuals who will switch a proportion of their pensions to its portfolios. Stoop is targeting a fourfold increase in clients after one year of operation. “I’d like to think that by then we will have perhaps 100 clients with an average of around £200,000 pounds each on the platform, taking us up to about £20m in assets under management,” he said.
Pangea is operating via P1 Investment Management, an investment management platform which also has an ethical portfolio range. Both Pangea and P1 are based in south-west England.
While hooking up with funds offered by the major players in asset management, like BlackRock or Schroders, might bring wider exposure to Pangea, Stoop said that won’t be happening unless they too focused entirely on positive impact investing in the future.
However, he would like to market the model portfolios developed by Pangea on the P1 platform to other wealth managers – and further down the line, if the business takes off and has more capacity, potentially handle workplace pensions for companies.