Impact Investor’s 2023 Annual Conference explored the journey to real-world impact, looking at the mobilisation of private and institutional capital to drive change, as the sector moves into the mainstream.
In the first of our multi-part coverage of this year’s Annual Conference on 7 December in The Hague, we explore how different investors are navigating the path to impact, with a closer look at two increasingly important asset owners: family offices and institutional investors.
Panellists and speakers addressed the latest developments in impact measurement and management, energy transition and net-zero strategies, nature-based solutions, SDG-focused investing in developing countries, blended finance, and more.
In her opener, Impact Investor’s co-founder and publisher Mariska Van Der Westen said the growing importance of impact investing is reflected in the expanding international readership of the nearly three-year-old publication.
Last year, impact investing surpassed the $1trn (€927bn) mark according to figures from The Global Impact Investing Network (GIIN), she said, but the challenges that the sector is trying to solve have also grown, from climate change to financial inclusion to addressing social inequity, and more. There is a lot of work to be done, Van Der Westen added, not least in understanding the real-world outcomes from impact investing strategies across asset classes.
“What are we actually realising in terms of impact?” This is the red line running through the day’s programme, she said.
Experts broadly agree that greater discipline, professionalism and transparency are key to building confidence and that the industry is generating measurable real-world impact and tackling the rise of ‘greenwashing’.
Keynote speaker Maurits Schouten, an impact investor and board member of PYM, the conscious investors’ community, spoke about his journey from conventional investing – “making money for the sake of making money” to the new world of impact investing.
He spoke about his studies and early career, the thrill of being “thrown in at the deep end” in the trading room, about big personalities, big trades and bigger bonuses as he headed to the “major league” in London. He loved it at the start, but wondered if there was more to investing than just the money.
Then a chance conversation with the director of Ashoka, a network supporting social entrepreneurs, opened a door to a new dimension, which was described to him as putting planet and people before profit. He was shown how a “finance guy” like him can help social entrepreneurs with their business and investment plans, and started investing in early-stage impact companies.
He said the goal of PYM is to keep growing and building the impact investor community, showing that robust commercial returns are possible, especially on the tech side. How investors approach their portfolio is a product of attitudes to risk-return, timescales, investment stages, and ultimately where they land on the “philanthropy scale”.
The bonds that tie
A late-morning panel session ‘Forging bonds: the collaborative journey of investee and investor’ expanded on how trust works in financial relationships and, indeed, what happens after the “ink is dry” and and investor has made a financial commitment to a company.
Farhad Miri, chief financial officer of Sweden-based Micvac, described the benefits of their all-in-one food-preparation solution based on in-pack cooking, pasteurisation and vacuum-sealing. He said the technology is good for the environment (less water, energy, CO2 and food waste), while improving food shelf-life (no preservatives) and taste, delivering “less waste and better taste”.
Micvac investor Costas Papaikonomou, founding partner of Luxembourg-based Una Terra Venture Capital Fund, pointed out something important: “You might not have noticed but [Farhad] didn’t actually talk about how his business was delivering impact, even though it is.”
The energy and water saving, waste-cutting, etc. are all strong commercial features, combined with delivering a better product. Impact is a consequence of that, he said, and this is a feature of how Una Terra invests, looking at “better-for-planet solutions while making a sensible commercial investment at the same time”.
He said his collaboration with Micvac is intense, continual, and is largely a content-based feed on how the industry works. Many discussions focus around expanding output from the current 25 million packs. Miri said it is helpful to have an investor with knowledge of the sector to “bounce ideas off on an operational level”.
The audience learned about Dutch-based Mosa Meat, a B Corp certified producer of “biologically twinned” meat. Daan Smit, head of operational development at the company, said their approach to cultivated meat “replaces beef with beef” without all the negative externalities associated with cattle-rearing such as CO2 emissions, water use, land damage, and animal welfare concerns.
“The impact we are trying to achieve comes automatically as we try to grow and scale our company,” he said. The company is pre-revenue but “making good headway”, which will be positive news for their investor on stage, he joked.
Christin ter Braak-Forstinger, founder and chief executive officer of Swiss-based Chi Impact Capital and a VC manager, explained why investing in “core regenerative companies” – where impact is engrained in the company’s core product or service – is important. She further emphasised that measurable and deep impact goes alongside strong financial returns.
What connects toilets and inclusive finance?
In a presentation on ‘Achieving Sustainable Development Goals through financial inclusion’, Sytske Groenewald, senior sustainability and impact analyst at Cardano, said access to financial services like microloans can even help the world achieve the “less popular impact themes”, such as SDG-6 – access to safe drinking water and sanitation.
She focused the talk on how to improve sanitation or simply provide “decent toilets” and why it is worth investing in. Groenewald outlined the role of financial institutions in making SDG-6 investible and what sort of impact can be expected from that engagement.
Finding a good clean toilet in countries like the Netherlands is no problem, she said, but for millions around the world in low-income countries, it is a luxury. The problem is not only a lack of funds and infrastructure for better sanitation, but poor awareness of its importance in health.
She explained the relationship between micro-businesses, households, inclusive financial systems, and the positive risk-adjusted impact-returns made possible simply by focusing on better sanitation.
Access to a small loan – as low as $300 – with incremental repayments can be enough to build a clean toilet and change the lives of families all over the world, she said. “It is a very good case for impact investing!”