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Invest for Impact


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Investing for a Sustainable Future

Today President Obama announced some major initiatives aimed to reduce carbon emissions into the atmosphere and abate the impact of climate change. Interestingly, last Monday I attended a panel session at the Triple Bottom Line (TBLI) Conference discussing the topic of climate change and how capital can be deployed to reverse the increase in carbon emissions.

The panel was moderated by Arian van Buren, Professor Sustainability Economics and Management from the Earth Institute at Columbia University.  Richard Bookbinder from TerraVerde Capital Partners identified the core problem is population growth. In 1800, the world population stood at 1 billion and by 1927 it had doubled.  Since the growth curve is exponential, 85 years later, there are now 7 billion people in the world. Population growth combined with increasing per capita wealth levels is driving greater consumption. As a result, in an economy powered by carbon-based fuels (coal, natural gas, and oil), CO2 is released into the atmosphere in ever greater amounts.

The panel included James Leaton, Research Director for Carbon Tracker , based in the United Kingdom. James laid out the scientific and the quantitative reality of climate change. Increased CO2 emissions are overwhelming the environment’s ability to absorb it, causing it to form an atmospheric blanket that traps heat. This threatens to push temperatures over 2 degrees Celsius, the acknowledged tipping point for drastic climate change.

Source: The New Economics Foundation

Source: The New Economics Foundation

Carbon Tracker, in collaboration with the Grantham Research Institute for Climate Change and the Environment at the London School of Economics and Political Science, conducted analysis to stress-test the carbon budgets. This analysis estimates that the available budget is 900 Gt of CO2 for an 80% probability to stay below 2°C and 1075 Gt of CO2 for a 50% probability by 2050. What is alarming is that in previous carbon budget estimates, the budget for 2000-2049 was 886 Gt of CO2 and we have already used half of that. Unfortunately, there are 2,860 Gt of CO2 in proven reserves of coal, natural gas, and oil under the control of companies. If these companies follow only a profit motive for their shareholders the climate balance will be tipped to unsustainable levels.

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Scaling Sustainable Investments

Screen Shot 2013-06-21 at 8.21.02 PMI had the pleasure of attending the 2013 TBLI (Triple Bottom Line Investment) conference on June 17th in New York City.  Day one of the two day conference highlighted what became a recurrent theme: financially viable sustainability projects and companies are available for investment. What is missing are the appropriate financial products for the end buyer to actually make an investment at a scale that will shift the status quo and accelerate the transition to sustainable systems.

The Opening Keynote by Paul Rose, Vice President of the Royal Geographical Society, was effective in making clear that the continued deterioration of our environmental ecosystems is accelerating to potentially catastrophic levels. The need has never been greater to solve the critical element of deploying capital to sustainable and socially conscious enterprises. He did this in excellent fashion through wit and humor, which made his slide shows of global environmental collapse from his many explorations ever more alarming.

Paul followed his presentation by moderating a roundtable assembled to address the following questions, “Do Sandy and Katrina make a lasting impression regarding ESG and Impact Investing in the USA?” and, “What sustainable new initiatives or policy changes are to occur in the (American) financial industry?”  Included on the panel were Mel Aaronson, president of National Conference on Public Employee Retirement System (NCPERS) and treasurer of the United Federation of Teachers (UFT); Carter Bales, Chairman at NewWorld Capital Group, LLC; Peter Malik, Managing Director, Corporate Engagement & Innovative Finance at The Nature Conservancy; and Hilary McMahon, Director of Research, Carbon War Room.

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Accessing the $650 Billion Market Potential for Sustainable Investing

This week the team at Hope Consulting released a new report “Gateways to Impact: Accessing the $650 billion market potential for sustainable investment”. The report, based on a nationwide survey of 1,065 financial advisors, found that 72% of financial advisors show interest in sustainable investing and 60% of advisors see sustainable investing as an opportunity to expand their practice.

The full report covers four topics about financial advisors and sustainable investing: their interest in sustainable investing, their barriers to recommending sustainable investments, their preferred positioning of sustainable investments, and the market potential for sustainable investment to be incorporated into client portfolios.

The report found that financial advisors would recommend sustainable investments to one-third of their clients and would allocate 10-20% of those portfolios to sustainable investments. This means the market potential for sustainable investments is $650 billion, based on U.S. advisors placing 2.5% of their assets under management (AUM) towards these investments.

WHY INVEST SUSTAINABLY?

Sustainable investing appeals to financial advisors for many reasons. They see sustainable investing as an opportunity to stay ahead of the curve, differentiate themselves from competition, and meet the needs of their clients. Despite their growing interest, many financial advisors indicated that they are still not fully comfortable recommending sustainable investments because they do not understand the market, the products, or the balance of financial versus sustainable returns.

MISSION MARKETS ROLE:

At Mission Markets we see our role as bridging these gaps. We provide financial advisors interested in sustainable investing a marketplace to advertise their specialized services and gain new clientele, while simultaneously educating the advisors about the market and allowing them to discover sustainable investment opportunities.

The Gateways to Impact report confirms that interest in sustainable investments is rising, and it also reiterates our mission to create an impact and sustainability marketplace where all stakeholders, whether they are financial advisors, sustainable businesses, financial institutions or individuals can connect, learn and discover more about impact investing and  sustainable investment opportunities.

Mission Markets CEO and Founder Michael Van Patten contributed to the report, which was also supported by The Rockefeller Foundation, Calvert Foundation, Deutsche Bank, Envestnet and Veris Wealth Partners. To read the full report click here.

– Eleanor Horowitz, Associate, Mission Markets Inc.


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Impact and Sustainability Markets: Challenges of Turning a Vision into Reality

Mission Markets founder, Michael Van Patten, discusses the challenges ahead for the impact and sustainability market.

There is a lot of confusion and uncertainty when it comes to the state of impact and sustainability markets. The root of the confusion and hesitation is that many do not have access to the right information or networks. One of the main goals of Mission Markets is to eliminate this confusion and hesitation by combining leading capital markets, technology, information, and advisory capabilities with our comprehensive online marketplace. From my perspective, a centralized marketplace for this space is critical. Here are some of the trends and challenges that we have observed in our work at Mission Markets up to this point that have driven our organizational development thus far.

1. It’s here to stay.

The biggest challenge confronting the sustainability and impact investing markets is convincing investors and potential stakeholders that this is not a temporary infatuation that will wane over time. Taking a step back to look at the larger picture, we are noticing that there are many substantial trends that indicate that these markets have serious potential for delivering unprecedented social and financial returns. Some of these market trends are:

  • Major corporations are now pricing in externalities in their businesses and developing plans to mitigate those externalities. For example, apparel makers like Levi Strauss are developing standards to increase the transparency regarding the environmental footprint of their supply chain and products. Major hotel chains including Fairmont, Marriott, Hyatt, MGM and Hilton are also working together to develop a singular standard for measuring their carbon footprint. (Check out this article in Green Biz)
  • Consumers are also increasingly becoming aware of the choices they have with respect to incorporating sustainability in their daily lives. There is growing consumer demand for organic and sustainable products that is projected to increase over time. In response, a whole industry is developing to satisfy this demand. (See this article on ethical consumer spending)
  • Money managers, financial advisors and even major banks are receiving requests from clients about the sustainability and impact of their investments. The Social Investment Forum identified $3.07 trillion under management that have at least one socially responsible investment criteria.

These market trends indicate that there is a need for centralized, trusted marketplace where established companies, nascent enterprises, and investors can come together to address these challenges and find opportunities.

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Guest Post: Educate!

Investing in Africa: Enterprising Education and Microtechnology

When I first sat down to research the Ugandan market, I read a statistic which made me first smile with giddy anticipation and then shiver in trepidation: over 50% of the Ugandan population is under the age of 18. Uganda has a population of over 32 million people. I smiled because that means my field, education, must be a thriving industry; however, as a teacher I know the hazards of fitting such a large a number of youth together into classrooms and the dangers of leaving them out.

I am in the business of Enterprising Education. It is a new field of social entrepreneurs who recognize that the factory-model education we inherited from the 19th century cannot be exported around the world to markets such as Uganda where there are millions of young people living on two dollars a day. The solution is neither more low-quality public schools nor more traditional private schools. The growth is in entirely new models of education enterprises. I am part of a global network of social innovators with solutions on how to educate the world in self-sustainable schools or without classrooms.  This method allows students to earn and learn at the same time by using new cost-saving technology such as cell-phones, community-based web portals, and even youtube.com!

My organization, Educate!, is at the forefront of this new wave of Enterprising Education. Educate! unlocks the potential of youth in Africa to combat poverty, disease, and environmental degradation. We provide a proven mix of a social entrepreneurship course, long term mentoring, and an alumni program that empowers high school aged youth to create effective solutions to the most intractable problems facing their communities. Educate! has over 1,000 young people from every major demographic group in Uganda: urban, rural, wealthy, impoverished, etc. The government of Uganda asked Educate! to incorporate our curriculum into the national education system, which will reach 100,000 youth by 2015 and be the first national social entrepreneurship curriculum in the world. This curriculum pilot will also include an extensive randomized impact evaluation. Educate’s core model is exponential empowerment – a long-term investment in youth so they can positively impact and empower many others. Educate! students have directly impacted over 15,000 lives and created thousands of dollars in value for their communities.

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Reporting from SOCAP Europe: Mission Markets Goes International

Greetings from old Amsterdam! I am sitting with Steve Rocco (Mission Markets Co-Founder) in the foyer of a building that was built when New York was New Amsterdam, and the wireless internet is faster than in our offices in Soho.  SOCAP picked a great spot for its inaugural European conference.

The conference is sold out (again, that makes three years running!) which bodes well for the social capital markets in general, but it makes for an awful lot to absorb in just three days.

I presented Mission Markets to a global audience of impact investors (yes that’s me in the photo) yesterday, and am pleased to report it went smashingly well.

We were already pleasantly surprised how well-known Mission Markets was here on The Continent before our session, and afterwards it only got better.  We may not be a household name yet, but within this admittedly small pond, we’re pretty big fish and it feels terrific.

Timing our announcement of Mission Markets’ partnership with Impact Investment Exchange Asia with SOCAP worked out nicely – no surprise that news played well to this international audience.  I plugged the partnership in the presentation too, in addition to HubCulture, the brains behind the Ven digital social currency.

The conference is winding down now, there’s an oddly dressed man informing us the final session is about to begin by gently banging a gong as he wanders the room (sounds tacky but here it works) and so I will end here.  I’ll have more to say about the experience after giving it a while to soak in… dag!

– Jeff Tuller, CTO/Director of Social Metrics


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Guest Post: Slow Money NYC

Mission Markets + Slow Money NYC = Entrepreneur Showcase and Resource Exchange, this Saturday, May 14th in Brooklyn, NY.

A former boss of mine, whenever he heard a good idea, would look at his staff and say, “Let’s dream that into existence.”  He was directing a team of artists, and his words were our marching orders to transform our wildest thoughts into tangible work.

I was reminded of this when I read the book Inquiries into the Nature of Slow Money by Woody Tasch.  For a few years now, our country has been wading through tough economic times.  Yet, to give an example, we continue to search for signs of recovery in a higher GDP.  Considering that the GDP measures all economic activity — everything from car accidents to mountain-top removal included — it hardly seems a measure of improvement.  It’s time for kindred thinkers like those behind Mission Markets and the Slow Money movement to dream something new into existence.

With these lofty goals, I’m happy to announce tangible work right now:  This Saturday, May 14th, Slow Money NYC is proud to partner with Mission Markets for the first-ever Entrepreneur Showcase and Resource Exchange in Brooklyn, NY.  The event will be at The Commons, 388 Atlantic Avenue, from 1-6 pm.

Slow Money NYC is a network of food activists, investors and entrepreneurs.  We nurture a range of conversations in order to actively develop funding and investment channels for local and sustainable food enterprises.  Our work is based on the principles of collaborative knowledge sharing, mutually reinforcing relationships, community participation, fairness, diversity and non-violence.

Like Mission Markets, we want to see investment directed towards companies that restore our environment.  We believe that, in turn, will restore the economy.

On Saturday, May 14th the doors are open to all.  In addition to the presentations from the ten Slow Money NYC entrepreneur finalists, we’ll have a Resource Exchange with numerous exhibitors who offer a range of services for sustainable food and farming entrepreneurs.  And we’re delighted to host Manhattan Borough President Scott Stringer as the Opening Speaker.

Why this and why now?  On page 116 of Slow Money, Tasch gives us the status quo:  “I would argue that an investor whose financial activity is predicated on extraction — on the linear take-make-waste methodologies of a world that had never seen the picture of the earth rising over the moon — is not really an investor at all.  He is not truly investing himself in that to which he is applying his capital.  Quite the opposite.  He is keeping himself completely out of it, denying any personal connection to or responsibility for that to which his capital is lending its energy.”

Later in the book, within pages 132-136, he writes, “…financial markets are man-made.  And we can remake them…We need to create a new market.  A new kind of market.  A market that will turn the market into a market or that market.”

Join Mission Markets and Slow Money NYC as we bring into existence new, sustainable food and farming markets for New York City this Saturday, May 14th.

 

Nicole Reed
Steering Committee
Slow Money NYC