Investing for Social & Environmental Impact 

Recently it has become possible to

See the disparate and uncoordinated

Innovation in a range of sectors and

Geographies converging to create a

New global industry, driven by similar

Forces and with common challenges

Using profit-seeking investment to

Generate social and environmental

Good is moving from a periphery

Of activist investors to the core of

Mainstream financial institutions.

CLEAN TECHNOLOGY—Once a niche interest of philanthropists, the sector has grown

tremendously, with $148.4 billion of new investments in clean technology in 2007. Clean

tech investments are the destination for more than 10 percent of venture capital funding,

although much of this funding is purely profit-seeking and not motivated by impact. Among

the many funds interested in clean tech are London-based Generation Investment Manage-

ment, which integrates sustainability into equity analysis and closed a $638 million Climate

Solutions Fund in 2008; and Connecticut-based MissionPoint Capital Partners, whose $335

million fund is focused on solutions for a low-carbon economy. Top venture funds Kleiner

Perkins Caufield & Byers and Draper Fisher Jurvetson are also leaders in this space.

MICROFINANCE—Microloan volume has grown from $4 billion in 2001 to $25 billion in 2006.

Successes within this rapidly developing sector include responsAbility, a Zurich-based advi-

sory services firm founded in 2003 that is currently channeling more than $600 million in as-

sets into microfinance, much of it from private banking clients and high-net-worth individu-

als. The first collateral debt obligation to be backed by a portfolio of loans to microfinance

institutions was issued by the Swiss company Blue Orchard, which sold $87 million worth to

private institutional and individual investors in 2004-5.

GLOBAL HEALTH—The International Finance Facility for Immunization, launched in 2006,

raised up to $4 billion in triple A-rated bonds for the provision of vaccines that could save

5 million lives in the next 10 years. The bonds, which were 1.75 times oversubscribed, were

backed by eight donor countries and managed by Goldman Sachs and Deutsche Bank. A

number of newer funds, backed by experienced managers (e.g., senior executives from

Putnam and Oxford Bioscience), have launched in the last 12 months seeking to combine

financial return and mission impact.

SUPPORTING JOB CREATION AND SMALL AND MEDIUM ENTERPRISES 

IN DEVELOPING COUNTRIES—

Successes have been launched using a range of funding sources. The large

nongovernmental organization, BRAC, based in Bangladesh, uses enterprise investment-

driven approaches to serve the poor at a massive scale and has created almost 7 million

jobs through development interventions in Asia and Africa. Grofin, which was incubated by

the Shell Foundation and has proved to be commercially viable, has more than $100 million

invested in eight different funds, mostly in Africa; in 2008, it launched a new fund with $125

million of development finance money at its first fund closing. In South Africa, Business

Partners International was launched as a business providing a full-service offering to entre-

preneurs, including financing and technical assistance. It has invested $88 million, with more

than 80 percent of deals in businesses owned by black entrepreneurs or women.

COMMUNITY DEVELOPMENT IN THE U.S.—

The Community Reinvestment Act, originally

passed in 1977, has provided incentives to dramatically increase investment in poor commu-

nities—a total of $26 billion was invested in the U.S. in 2007. Self-Help, a community devel-

opment lender and real estate developer, has provided more than $5 billion by developing

a secondary market for non-conforming mortgages that responsibly financed low-income

home purchases. In 2007 alone, Local Initiatives Support Corporation made more than $1.1

billion in investments to revitalize low-income communities, and Enterprise Community

Partners invested $1 billion in affordable housing and community development. ShoreBank,

the first community development and environmental bank holding company, has grown

dramatically, with $2.4 billion in assets as of the end of 2007

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This BLOG  looks at pensions and their impact on what are called Public Private Partnerships or P3’s these are not really about private funding at all but about two streams of public funding, pensions and government with private capital a third partner.

We will also deal with other pension matters, such as Defined Contribution Plans (DC) vs Defined Benefit (DB) PLANS, the weakness in private plans, the need for pension reform in public pensions to have shareholder rights, directorships and ethical investment directives and policies. 

Finally taking the long view we will show how these funds are forms of evolving social capital that is dominating private capital as we evolve into socialization of capital. 

Click HERE to read more....