Leading the way in ethical investment and generating funds for nonprofits
John Berry, co-founder of ethical investment company Pathfinder joined Purposely Podcast to share his story.
John along with Paul Brownsey set-up Pathfinder Asset Management in 2009 and over the last decade they have marked themselves out as leaders in responsible investment. They launched their first ethical fund in 2010 and have since established a track record for not only delivering great returns, but also doing so responsibly and ethically. Pathfinder is now part of Alvarium Wealth.
What's the mission and purpose of Pathfinder?
‘The way we invest our money has real world impacts. Our mission is investing ethically to grow individual wealth and collective well-being, so there's two parts to that. The first part wealth, where we're managing people’s money (as well as organisations) and we want to make them as much money as we possibly can and we're driven by financial purpose of fantastic investment returns. But the wellbeing part is just as important from a personal and a social and environmental well-being perspective. We're trying to generate good outcomes, not just avoid harm, but generate good outcomes through the way we invest.’
Have we reached a time in history when investing ethically no longer means low returns?
‘I think that is an excellent question. Because the biggest hurdle we've had to overcome over the last 10 years is the preconception that if you invest ethically, it will cost you in terms of returns. I think we're now at a point where people now know that you can have both. An example of this is our KiwiSaver ethical fund which has enjoyed stellar returns. We put that down to good investment decisions but also the fact that we're focusing on companies with good environmental and social metrics and these companies tend to be more resilient. So yes, you can have both.’
Does Pathfinder regularly generate funds for good causes?
‘We have taken a social enterprise approach with our KiwiSaver (pension fund) generating awesome returns for investors at the same time as making a positive impact on communities. We’ve both been personally involved in charities, Men's Health Trust for me and Paul’s been involved in Arthritis New Zealand. We understand the main problem for charities, particularly smaller charities, is sourcing consistent funding - long term passive income streams that they can rely on. We were scratching our heads thinking how we can use financial markets to overcome that problem. So, our solution is our KiwiSaver fund where we charge normal fees and give 20% of that to our family of charities. We want to be giving $50,000 a year to each of the 17 charities we support, and we are getting closer to that.’
You have spent a lot of time living abroad? What made you come home to New Zealand?
‘I lived overseas for years through the 90’s and originally I wanted to drive from London to Kathmandu. While we didn't make it, we did get to spend a lot of time in Syria and Jordan which was really interesting. I also worked in London for several great companies including Deutsche Bank. It was a difficult transition coming back, however, it felt like the right time to do it. The decision was based around my family and our kids were about to start school. I had also experienced anxiety issues while I was working and I just knew for my own mental health and for my family that I needed a change. I spent such long hours working through weekends and nights and it was very, very intense. Not the healthiest thing for me or for my family. So, coming back to New Zealand gave me some headspace, an opportunity to reset and eventually launch Pathfinder and it also gave me the opportunity to be really involved in my kids.’
How did you start and what was the motivation for Pathfinder?
‘Pathfinder was launched at the same time as the global financial crisis that trashed the global economy as well as people's lifetime savings. We persisted though… although it was tough at first and we didn't pay ourselves for years. We launched our first ethical fund in 2010, a global water fund, which is still going to this day, and it has close to $50 million funds in it. It was really tough at first to get buy-in for that fund, typically we were pitching to financial advisors, and they would say .… ‘I’ve got one nutcase, greenie, tree hugging client who's going to be interested in this, but this is not appropriate for the rest of my clients.’ There were, however, one or two financial advisors who we’re forever grateful to though, individuals who supported us and saw there was an opportunity to make money, at the same time as improving the planet. There were a lot of a lot of knock backs but in the end we got there.’
What is your vision for Pathfinder in the future?
‘We're going to keep making money for investors, but we're going to keep on pushing the boundaries on what it means to be ethical. Part of that will be investing in impactful small private businesses, you know, we've recently invested in former All Black John Kirwan’s mental health business as well as micro finance for funding for female entrepreneurs, so they can get a laptop or a sewing machine which will enable them to generate an income for their families. We've also invested in a solar light project light locally. So those are the sort of things we'll be rolling out, purposeful but financially rewarding investments.’