A financial inversion is underway with profound implications for people and the planet. Capital, usually treated as scarce, is abundant. Natural resources, long considered abundant, are increasingly scarce. Global mega-trends are driving a transformation of finance, opening potentially huge opportunities for profits and progress.
ImpactAlpha convened an online roundtable of leading impact investment practitioners to advance the emerging agenda for broadening and deepening these promising developments.
The panel was headlined by David Chen, the Founder and CEO of Equilibrium Capital Group, who made the argument that huge pools of capital are beginning to align with long-term goals for improving life on the planet. One could say in the last decade social entrepreneurs created experiments all over the planet to crack new business models to provide basic services at low cost. This coming decade, according to Chen, is now all about building off the most successful of those models and focusing on scale.
Adam Davis of Ecosystem Investment Partners made a strong argument that the right public policy is critical to making everything work. His firm uses the mandates of the Clean Water Act to create offerings to private sector capital for buying up and preserving watersheds. When incentives are aligned, capital can move quickly: Chen pointed out that 28 states in the United States have set up renewable energy portfolios mandating at least 10 to 15 percent of all electricity come from renewable energy. Already 21 states have hit the mark because capital sees a clear way forward.
Joy Anderson, President & Founder of Criterion Institute, brought a historical perspective that reminded everyone how the financial rules change all the time and are very malleable. She talked about ways we could redefine “fiduciary responsibility,” beyond the current obsession with maximizing returns and get back to the idea of responsibly shepherding capital. Lloyd Kurtz, chief Investment officer of Nelson Capital Management, talked about the importance of public markets, where the bulk of capital is located.
Sari Miller, an angel investor and CEO of Sarjay, Inc., provided an example of how investors are re-evaluating risk in the developing world. She is an investor in a life insurance company in South Africa that issues policies to people with AIDS, after determining that with access to medications and good treatment plans their risk of death is not much higher than people who have not been infected. This life insurance allowed them to get mortgages and business loans that they otherwise would not be able to obtain. Liesbet Peters, managing partner of D. Capital Partners, described a scheme to finance malaria prevention from the savings to businesses from reductions in employee absenteeism.