In this edition of #Shifts, ImpactAlpha’s monthly roundup of ideas and trends driving impact investing: investors look to restore degraded land and back U.K. charities, renewables could boost Ohio’s economy and migration is a boon for host economies.
THESES: PROVOCATIVE INVESTMENT PROPOSITIONS
Reducing and restoring degraded land. Financing land rehabilitation, sustainable agriculture, ecotourism, and other areas can increase the value of land, create a more stable environment for supply chains and generate profits for investors. Partnerships such as the Initiative 20×20 and Bonn Challenges have mobilized over a billion dollars from impact investors for restoration projects in Latin America and elsewhere. Restoring degraded land is also the thesis behind the Land Degradation Neutrality Fund, a new UN-backed blended finance vehicle, which expects its first closing in early 2017. (World Resources Institute, Conservation Finance Network)
Social innovation in the Southern Cone. Innovative startup and scale up companies addressing social and environmental problems in Argentina, Uruguay and Paraguay are getting their own dedicated fund. The Multilateral Investment Fund within the Inter-American Development Bank is anchoring a new fund which it hopes will attract both international and local capital to the impact investing market in the region. (FOMIN)
Charities in the U.K. Revenue-generating non-profit charities were among the first recipients of impact investments. Now, a new fund in the U.K. is providing grants to charities and for-profit social enterprise to become “investment ready.” Charities and social enterprises with the ability to take and repay loans would create a more financially stable social sector in the U.K. and create a broader pipeline of investment opportunities for the nation’s social investors. (Civil Society Media)
MARKETS: ATTRACTIVE SECTORS
Social services. Social, development and humanitarian bonds are popping up everywhere. They promise to attract private capital to finance the delivery of a host of social services while allowing governments to attempt innovation and increase effectiveness. Connecticut recently launched a bond targeting addiction recovery with private investor BNP Paribas as the lead investor. Convergence provided a grant to Kois Invest to develop a bond to finance employment for refugees in Jordan, Lebanon and Turkey. (Middletown Press, Devex)
Healthy food. The writing on the wall is growing for unhealthy, processed and non-sustainably growth food. That means local, organic, ethically-produced food is a growing investment opportunity. U.S. meat-manufacturing behemoth, Tyson Foods, recently took a five percent equity stake in plant-based “meat” product maker, Beyond Meat. Over in the U.K., Bridges Ventures backed vegetarian food supplier, Vegetarian Express, with an $6.8 million equity investment. (NYT, ImpactAlpha)
Housing finance for the BOP. Rural to urban migration will grow the number of cities with populations of 10 million or more from 31 to 41 by 2030, according to the U.N. But not everyone is moving to cities. In India, those that don’t migrate face a 40 million-unit housing gap and a lack of land titles makes securing mortgages for available units a challenge. Swarna Pragati Housing Microfinance raised a Series B round of financing from Zephyr Peacock, Omidyar Network, Aavishkar and the founders of Asha Impact to extend micro-mortgages to rural Indians. (VCCircle)
SIGNALS: EMERGING TRENDS AND IDEAS
Fixing global food systems could create 14 big new markets. Fourteen major business opportunities worth $2.3 trillion could be unlocked by 2030 by building solutions to challenges within agriculture and food systems. Reducing food waste ($405 billion), developing low-income food markets ($265 billion), manufacturing micro-irrigation ($85 billion), practicing sustainable aquaculture ($125 billion) and more could also create up to 80 million new jobs. (AlphaBeta)
Renewables are as American as the Hoover Dam. More than 2.5 million Americans already work in clean energy. Rolling out solar and wind farms and increasing energy efficiency could add an additional hundreds of thousands of blue-collar construction and manufacturing jobs and boost the GDP of the state of Ohio by up to $10.6 billion by 2030. Reductions in pollution associated with the shift to renewable energy could also save health care-related costs by up to $3 billion. (Greenlink Group)
Migration is good for the economy. Populists worried that immigrants are hurting the economy are wrong. A recent study found that a one percent increase in the share of migrants — both low- and high-skilled migrants — among adults leads to a two percent increase in GDP per capita over the long term. The challenge, notes the World Economic Forum, is getting the short term polices — language training, job search support lower barriers to entrepreneurship — right. (IMF)
Photo by Nathan Anderson.
#Shifts happen. More from our series.
- #Shifts October/November: New Theses, Markets and Signals Guiding Impact Investors
- #Shifts September: New Theses, Markets and Signals Guiding Impact Investors
- #Shifts August: New Theses, Markets and Signals Guiding Impact Investors
- #Shifts July: New Theses, Markets and Signals Guiding Impact Investors