As part of our mandate to invest in, co-create and build with organizations and people who strive towards transitioning to a net-zero future we were in Geneva for the Building Bridges Summit this week.
Our intention in attending this event was to develop a sense of the perspective of financial instituitions in Europe towards Climate Crisis, and to grow our collaboration network. Financial institutions appear to be engaged in a tentative standoff, each awaiting moves by their peers and regulators, with no forthcoming initiative that boldly seeks to reshape the world anticipated in the immediate future. Moreover, my perception of these establishments has evolved, viewing them now as considerably more vulnerable than their outward appearances suggest. This is particularly evident as they navigate the challenge of maintaining business as usual amidst the whirlwind of a swiftly transforming environment. The notes on some of the sessions we have attended can be found at the end of this entry.
With relations to growing our collaboration network, we had the privilage of meeting with several individuals and organizations that are passionate in driving the change. We have started new relations and nurtured old ones in our efforts to support the transition to a Net-Zero future. We are excited about the many projects we will be launching and participating in, in the weeks to follow.
Seedstars, who was celebrating it’s 10 years of impact was the star of the event, from my perspective. Seedstar is a Swiss-based company that seeks to impact people's lives in emerging markets through technology and entrepreneurship. They have started as an entrepreneurship competition in emerging markets 10 years ago, where they pick the top 3% impact startups among applicants and support them with training to help them grow their business, receive investment and scale. Their programs are funded by clients who would like to support impact eco-systems in emerging markets. They have developed their own market index, to have a data-driven approach while growing emerging market eco-systems. I was especially inspired by the number of organizations that systematically created their own data-sets where there’s none. They further use the SDG framework to report the impact of the startups in their network. I had met with Seedstars before in Davos, but to see them in a sustainability finance summit provided a much broader context about the power of the model they have developed. Their network of thousands of entrepreneurs and fund managers across 90+ emerging countries and their systematic approach has become a model that enables financial institutions to deploy capital in impact activities in emerging markets. It seemed that Seedstars is indeed the organization that is building bridges. It was a pleasure to meet with their network of brilliant young people and to expand perspectives through the sessions they held. For more on their Theory of Change, see here.
We had an opportunity to come together with other impact investors and Family Offices during this event to exchange co-investment opportunities, and to look into structures that will enable more capital to flow to impact investments. Good Investors turned out to be a very interesting model for systematic change where the co-operative of families aim to build a financial system where sustainability drives profits, through collective intelligence and joint investments.
Some of the prominent investment opportunities we had the privilage to dig deeper in were
- Everrati that electrifies iconic classic cars,
- Hyperion Robotics that provides optimized and low-carbon concrete products for infrastructure projects and industrial grade applications reducing carbon footprint of foundations up to 90% and
- Someone Somewhere, which creates innovative products for enterprises through recycled textile waste without using water and dye, while using artisanal work, generating fair and consistent jobs.
- Cornucopian Capital - Fund which is a very interesting health technology fund that is focused on preventive medicine, Medicine 3.0.
The symbiotic relationship between family offices and impact startups has become increasingly apparent through these connections. Family offices, with their value-driven and long-term investment approach, diverge significantly from the strategies of venture capital investors. Simultaneously, impact startups offer family offices a dynamic and direct avenue to effectuate positive global change, aligning seamlessly with their investment philosophy.
We will continue to weave a network of collaboration to support organizations and people who strive towards transitioning to a net-zero future. Feel free to reach out to us if you would like to have an expanding conversation on any of these topics.
Session Notes:
How Much Does Your Business Depend on Nature? Getting Ready for Nature-Related Financial Disclosures
- It has taken 150years to create a global equity market of 100trillion usd. We have 3 decades to create a green economy market of the same size.
- Nestle is impacted by biodiversity, Holcim (Cement) impacts biodiversity. Finance, Insurance all have their own relations.
- TNFD (Taskforce on Nature-related Financial Disclosures) framework builds on what has been done up to now and provides practical guidance on aligning with European Standards, with the intention to speed up the process.
- Physical Risk, Systemic Risk, Transitional Risk.
Impact-Driven Private Equity
- We start from deciding the theme. What do we want our impact to be?
- When we started it was not called Impact investment, there’s now clarity about intention. We are now moving beyond storytelling to actually discussing a specific theory of change and the data behind it.
- How is return on investment in impact investments compared between emerging markets and developed markets? Roi expectations remain the same. Volatility depends on market and business cases.
- Impact investments are typically defensible in financial crises because they address major problems such as agriculture, food, energy transition etc.
- Impact investments need to be actively managed to make certain they are in alignment with the intended impact.
Human Capital: A Key Driver of Productivity and Sustainable Growth
- Sector based benchmarks
- Utilizing 25 years of data to set benchmarks
- Create your own datasets and exchange with other parties to grow the ecosystem
ESG in DCF: A Not-So-Magic Formula to Price in Sustainability
- WBCSD: World Business Council for Sustainable Development New Guide Launch: https://www.wbcsd.org/Overview/CFO-Network/Resources/Guiding-the-integration-of-sustainability-in-valuation
- Sustainabilty Context and Exposure, Management Strategy and Response, Influencing Factors, Key Value Drivers, Account-able Elements
- There’s no discussion about whether or not ESG creates value; that is clear. What is challenging is to go through systematic change at scale.
- If you can quantify the effect of ESG on valuation do that and it will very quickly become industry standard, opportunity to guide the market.
- Majority of the future value of sustainability depends in intangibles
- Track the performance of esg+, esg- and esg neutral shares to develop your own data set and approaches when in need.
- There are no facts in ESG ratings, there are breadcrumbs in directions. You can not consider buying an AAA rated product with eyes closed, you need to keep your eyes open.
What’s Next for Nature Markets (In an Ever More Rapidly Changing World)?
- What is the role of central banks and supervisors in integrating nature and climate?
- Central banks and financial supervisors need to intervene because climate crisis creates financial crisis.
- Climate risk analytics can be integrated to capital requirements by central authorities.
- Discussion on whether or not biodiversity credits similar to carbon credit should be issued.