Impa-Structure: Part 2 – It’s Gray

“Life isn’t black or white, it’s all sorts of shades of grey.” -Nicky Morgan (British politician)

In Part 1, we contemplated our values, which can serve as the basis for refining our “why?” Understanding our “why?” can then serve as a foundation for what we would like to accomplish (loosely referred to as “impact”) and offer some guidance on what investments may be the best tools for the job. Today, we’ll dive deeper into the murky waters of the impact of our investments; while assessing such things may initially sound straightforward on the surface, it is a topic laden with tradeoffs, limited information/control, externalities, and subjectivity. Sounds fun, right!? And, full disclosure, this seems to be bleeding into a third installment, so my apologies in advance. Here we go!

First, some clarification

Based upon some reader feedback (thanks, Ellen), let’s go on a quick tangent that may be useful as you think through our impa-structure.

If you Google “impact investing,” you’ll quickly be inundated with trendy terms like ESG  (environmental, social, and governance), “responsibly invested funds,” and “sustainable.” In the search results, you’ll probably also see the definition of impact investing: “the act of purposefully making investments that help achieve certain social and environmental benefits while generating financial returns.”

Maybe it’s only me, but it seems including the words “social and environmental (benefits)” in the impact investing definition immediately adds a connotation of “greenness” (if you will), as we see with the above Google results. It shouldn’t be the case, as here are the definitions of those two terms separately:

  • Social benefit: “Something that benefits society.”
  • Environmental benefits: “Assets and services that enhance the capability of communities and individuals to function and flourish in society.”

With these bullet points as the true meaning of social and environmental benefits, which are inherently very broad, the definition of impact investing is pretty perfect. It’s ultimately investing in a way that helps society and humans flourish. THAT’S what we want to focus on to help keep an open mind regarding impact: investing for human flourishing.

Thus, the buzzwords of ESG, SRI, sustainability, etc., could be examples within the Venn diagram of Impact Investing, but it depends upon the quality of their…wait for it…impact. Growing your portfolio to educate your grandchildren or ensure your kids have a down payment for a home – factors that allow them to flourish and ultimately benefit society – is unambiguously impact investing.

Next, some examples of values

Once we know our values, we can start testing them for further refinement; this is where things get fun, as it will become apparent that values can directly conflict with one another. Let’s look at a simple example where I’ve decided that my investment values are as follows:

  1. Improving and caring for the environment; this likely includes developing cleaner energy, waste, sustainable food and water solutions, etc.
  2. Helping to advance society: pretty broad, but at its core, this would be the desire for others to have opportunities to develop (education, jobs), trying to avoid overt human suffering (perhaps reduced poverty/malnutrition), and being mindful of how future generations can build upon our accomplishments.
  3. Leaving a legacy for my family: beyond my retirement income, I want to create an endowment to leave our family mountain house intact for future generations and provide enough money to educate my ten grandchildren.

Last, a simple application?

Now, I’m contemplating an investment in a big oil company. It’s a well-run business that has been around for many years, and I believe it has a sustainable (and growing) dividend that aligns well with my financial goals. At first glance, this company very much disagrees with value #1. After all, isn’t oil among the most significant culprits of polluting and warming the earth?

On the other hand, oil is involved in nearly every aspect of our daily lives in some way – via transportation, the global food supply, and materials, to name a few, so perhaps it’s a “necessary evil.” Millions of jobs also depend on oil and natural gas (per the American Petroleum Institute, nearly 10 million jobs as of 2021); this supports an incredible number of families and children. Not to extrapolate too much, but it seems mathematically reasonable to assume that a select few of those millions of oil-funded offspring will be the creators of some of the most significant human advancements of their time.

In addition, at least one large oil company I Googled contributed $158 million via its corporate giving program in 2022 to community, educational, and other initiatives that help people globally. It also funded $179 million between 2000 and 2002 to combat malaria – a disease that killed 608,000 people in 2022 alone. If you’ve spent time in the not-for-profit sector, you know that raising those amounts of money is virtually unthinkable. Finally, that same company is at the forefront of developing sustainable, more climate-friendly energy solutions we will need.

Not black or white

The reality is that creating better solutions to the world’s problems will take time, resources, and a lot of money. While big oil (as an example) can be simplistically viewed as problematic, it’s also indispensable at this point in history and will be a required part of the solution. Also, if I become a shareholder, I can have more of an opportunity to monitor the company and vote my opinion to ensure it continues to create a better society.

Thus, after more consideration, this company may be (at worst) a toss-up regarding alignment with value #1, and it certainly seems to be aligned with values #2 and #3. Let’s call it “85 percent aligned with my values.” Is that good enough? If not, what’s a reasonable threshold? That’s for me to decide, as part of my impa-structure.

Next time, we’ll also consider the impact of our actions, and hopefully, even some Alts, as we round out this soon-to-be-three-part series.

Until next time, this is the end of alt.Blend.

Thanks for reading,



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About the Author

Steven Tresnan, CAIA®, CFP®

Private Wealth Advisor

Steve is a Certified Financial Planner as well as a Chartered Alternative Investment Analyst®. He is also an Accredited Investment Fiduciary, which helps him offer guidance to clients with fiduciary responsibilities, such as board members of trusts, foundations, and endowments. Steve earned a Bachelor of Science degree in Industrial Engineering from Penn State University.

Steve serves on the board and finance committee of New Music USA – a national nonprofit devoted to the development and appreciation of new music in the U.S.

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