Welcome to Impact Insights, the podcast series of Astoria Investment Managers.

Although impact investing has become more mainstream over the past decade, there is still

the notion that impact investors must choose between impact and financial return.

Guido Boliger, CIO at Astoria, brings you the evidence pointing to the opposite.

Guido, how do impact investments perform financially? Can we generate impact and performance? The answer to this question is yes.

If we, to understand my answer, maybe it's good to go to the basic of finance.

In finance, the price of finance security is the net present value of its discounted cash flows.

As a consequence, a company's share price can drift higher if it has higher cash flow than expected

or if it has less risk than expected.

If we take, for instance, the cash flow channel, we're seeing from the data that high-impact companies are more competitive,

they have higher profitability and higher sales growth.

If we look at the risk channel, high-income companies have a lower probability of suffering from exposure to climate risk and incidents that

can impact their share price. Finally, if we look at the second source of risk, which is systematic

risk, higher impact companies are also more prone to benefit from capital flows, which

will facilitate the climate transition. Therefore, the cost of capital

can be lower, leading to high evaluation in a discounted cash flow framework. If I take more

a macro view for this question, there are, and there will be massive investments in technologies

aimed at accelerating the climate transition.

We can think about hydrogen production, solar energy production, wind energy production,

and huge progresses have been made in recent years.

We're also seeing a lot of new patterns.

So we can compare somehow the technological

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