The Rise of Impact Investing: Paving the Way for Positive Social and Environmental Change
Zero One Hundred Conferences in Amsterdam 2024: The Impact Investing Pannel
We attended the Zero One Hundred Conference in Amsterdam last week, a 3-day pan-European conference, dedicated mainly to private equity (PE) and venture capital (VC) investors. It was refreshing to see sizable focus on the topic of ESG in the form of multiple panels - discussing diversity, impact, regulation, and more.
One of the highlights of the two-day conference was a debate on "The Rise of Impact Investing: Paving the Way for Positive Social and Environmental Change." This panel brought together notable voices from the industry, including Courtney Powell from 500 Global, Carolina de Azevedo from Emerald Technology Ventures, Silva Deželan from Forbion, Rikkert Beerekamp from Carbon Equity, Maria de Perlinghi from Norselab, and Machtelt Groothuis from Rubio Impact Ventures.
Even though this topic is frequently discussed at various events, this panel brought fresh insights, unique perspectives, and a wealth of experience in shaping the future of investment strategies. Below, we summarise the key take-aways.
Defining Impact Investing: A Paradigm Shift
Courtney Powell, the Chief Operating Officer and Managing Partner at 500 Global, set the stage by challenging conventional definitions of impact investing. "While 500 Global isn't exclusively focused on impact, our investment ethos emphasises creating a sustainable ecosystem. We believe in driving job creation and societal advancement alongside financial gains," remarked Powell.
Maria de Perlinghi, Partner and Chief Impact Officer at Norselab, offered a divergent perspective. "Impact investments are deliberate choices aimed at fostering positive environmental or social change while delivering financial returns," stated Perlinghi, highlighting deliberate alignment between impact and financial benefits.
A key element of the discussion: Impact investing today often lacks robust evidence and data. While scores of impact potential are commonly used, there is a significant need for more comprehensive data from a sustainability perspective to truly measure and drive impact.
Navigating Trade-Offs: Aligning Profit and Purpose
The proverbial debate of profit versus impact resonated across this panel as well. Rikkert Beerekamp, Head of Professional Solutions at Carbon Equity, said, "There should be no trade-off between impact and returns. We see cost curves of many technological solutions improving, and government support helps to bridge the gap in early-stage."
Silva Deželan, Head of Impact & ESG at Forbion, continued with stressing a different approach in early-stage investments. "Our portfolio companies do not have returns yet; however, we evaluate their performance in the form of meeting milestones. Underperformance not only affects financial returns but also hinders our ability to create positive impact," remarked Deželan.
Real-World Impact: Stories of Transformation
One of the greatest parts of the discussion was when the panelists shared examples of inspiring impact investments. "One of our notable investments is eFishery, a Southeast Asian venture revolutionising sustainable fishing practices," mentioned Courtney Powell, illustrating the tangible outcomes of strategic investments, developing from one fisherman to a Unicorn business today.
Maria de Perlinghi shared her enthusiasm for ocean solutions, highlighted Ava Ocean, a company transforming scallop fishing. Unlike traditional methods that damage the seafloor, Ava Ocean uses a touch-free technique from the gas industry, employing suction to harvest scallops sustainably. Maria emphasised the systemic impact, noting that countries are now requiring this environmentally friendly technology too.
Carolina de Azevedo, Head of Impact & ESG at Emerald Technology Ventures, echoed this sentiment. "Instead of focusing on climate mitigation, which, in my opinion, should have started 20 years ago, we focus on climate adaptation solutions, such as gene-crop modifications, as crucial steps in mitigating climate change's adverse effects."
Machtelt Groothuis, Partner and Founder at Rubio Impact Ventures, emphasized the importance of investing in mental health, pointing out the broad impact it has on different groups of beneficiaries, including employees and the wider society.
Charting a Course for Impact: Challenges and Opportunities Ahead
Rikkert Beerekamp expressed a personal opinion on the relationship between impact and incentives, noting that the right incentives might not be suitable for all types of companies and businesses. He pointed out that achieving impact varies across industries; some find it easier than others, requiring different approaches.
Machtelt Groothuis: "At Rubio, we say 'yes' to both impact and carry; otherwise, it's too easy to focus solely on financial returns. We've established an independent impact committee for this purpose, which sets the targets. Yes, it's a lot of extra work, but for us, it's the best approach. However, I do also agree that early-stage investments might require a different, more milestone-based approach."
Courtney Powell offered a different perspective: "From a General Partner perspective, we often see more negative outcomes when KPIs are set on anything other than financial performance. Achieving positive financial performance is also the only way to ensure long-term sustainability."
Our key takeaway from the panel was - that even though all the businesses and funds do have an impact - positive and negative, dedicated impact funds have an important role to play before regulation and stakeholder activism will set a possible new standard - all funds will be impact funds.
The Zero One Hundred Conference in Amsterdam was yet again a great event, going beyond the obvious discussions. It offered a great ground for networking - whether you are a "money" enthusiast, professional, service provider, or a young business. We would like to thank the organisers for the great pleasure of partnering at this event together.
