The term carbon offset and carbon credit are used interchangeably, although they differ slightly in their meanings. Broadly, carbon offsets refer to a reduction in greenhouse gas emissions – or an increase in carbon storage, used to compensate for emissions occurring elsewhere. Similarly, a carbon credit is a transferable instrument certified by bodies or governments to represent one metric tonne of CO2, that a purchaser can claim to reduce their emissions across another area of their supply chain. Simply put, offsetting is a way of paying to reduce emissions or absorb CO2 to compensate for your emissions.
Over the past decade, there has been a surge in philanthropic involvement with ultra-high net worth (UHNW) individuals donating a greater proportion of their wealth to charitable causes. The scale and manner of giving by UHNW individuals has both a direct impact on the non-profit space, in addition to influencing the wider philanthropic trends and activity across the general population. Therefore, UHNWs hold a pivotal position in inspiring other segments of society to commit to greater engagement.
In addition to philanthropy, there has been an increase in UHNW impact and ESG investing; the most recent Impact Investor Survey results show a 300% increase of UHNW’s investing in ESG, compared to just 24% of individuals investing in 2010. This increase in ESG investing is linked to a desire to positively impact the world, seeking out investments which prioritise social, ethical, and environmental considerations over financial returns. A recent global study, “World Shaping Wealth: The Impact of Affluence on the Next Economy,” found that 77% of UHNW individuals are prioritising using their wealth for a long-term positive impact on society and charitable aims.
This trend of increasingly prioritising social and environmental impacts of wealth over financial returns has also been seen within the next generation of UHNWs – a study conducted last year, found that over 50% of young UHNWs are investing in ESG solutions. It has been predicted that Millennials could invest between USD15 trillion and USD20 trillion into ESG investments over the next 20 to 30 years. With the ESG and sustainability market poised to reach a valuation of $39.9 billion by the end of 2023, family offices must be prepared to accommodate the shifting focus and criteria for investing of UNHW individuals and their families. A recent PwC report summarises how family offices can begin to translate their commitment to more responsible investment opportunities that align with UHNW values and legacy. Below are some of the suggestions to turn interest into concrete action:
In conclusion, philanthropic and ESG investing is becoming increasingly popular among UHNW individuals who want to make a positive impact on society and the environment. Family offices have an important role to play in supporting UHNW families interested in ESG investing and helping families translate their commitment to responsible investment opportunities that align with their values and legacy. Adopting a common language, dedicating resources, monitoring and reporting progress, and valuing performance are some of the ways that family offices can turn this increased interest into sustainability action.
Georgina Murrin is a ESG Analyst in Itriom’s London Office.
Itriom is the global impact platform helping leading families shape a better world. Itriom’s platform enables families to refresh and redesign their values, aligns them with the right UN Sustainable Development Goals, combining them in an agreed purpose and a Family Impact Charter. Itriom’s platform supports the development of impact initiatives and whilst providing discrete and secure spaces for peer-to-peer messaging and collaboration. Itriom’s core practices in Leadership, Geostrategy, and Sustainability benefit clients by developing strategies to engage and support the Next Generation in building a lasting legacy of which families can be proud.
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Alizah is an ESG Consultant and researcher. She supports Itriom developing sustainability related products and services, helping our clients identify potential opportunities for creating positive environmental, social and sustainable impact.
Georgie is an ESG Analyst and researcher. She researches trends, develops insights and reports, and writes insight articles on sustainability and ESG related topics to ensure Itriom’s clients are up to date on the latest policy, progress and initiatives to inform the platform and help our clients maximise their positive impact.
Practice Leader – Leadership & Resilience
Renowned family office thought leader, Tim works with UHNW families to ensure they are fully equipped to deliver their legacies inter-generationally and effectively.
Practice Leader – Sustainability
Dr. Herb creates methodologies and frameworks for managing, measuring and assessing sustainability performance. His work identifies where maximum impact can be made.
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Simon harnesses research, liaison and networks globally to identify opportunities for Itriom, building the knowledge needed to deliver intergeneration legacies for UHNW families.
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