Members came together for a session focusing on impact investing and ESG, and how to utilise all the assets at their disposal beyond capital to drive positive social change.
BY RUNCHEN HUANG
Since 2020, APC has been hosting Calls for Collaboration to enable members extend the impact of their philanthropy—through opportunities to share projects they are supporting with fellow members in order to find common interests and new ways to collaborate with each other.
In our first Call for Collaboration in 2022, members came together for a session focusing on impact investing and ESG, ending with a showcase of impact funds and initiatives they are supporting in areas of environment, health, and ageing.
Impact investing to plug the SDG funding gap
Many members felt that owning businesses that create negative externalities in the world was contradictory to their philanthropic motives to create positive social outcomes—and thus saw impact investing as one way to align their business practices with their giving and enable them to redistribute capital to enterprises with valuable missions to create impact.
Market-based solutions are necessary to plug the gap of US$5-7 Trillion needed to fulfil the SDGs. To date, only US$0.1 trillion comes from philanthropic dollars; in order to make impact investing more attractive to traditional investors, profit cannot be segregated from social good.
Debating the value of ESG frameworks
Members also discussed whether the value of ESG. While ESG frameworks helped companies measure internal processes, they are insufficient in guaranteeing social and environmental impact—and can also have unintended negative consequences if done without proper strategic planning.
For example, shifting the energy industry towards green technology can raise energy prices and cost of living for the average person; or shifting to organic farming by banning fertilisers can cause a decrease in overall rice production and affect livelihoods, despite these initiatives getting “high” ESG scores.
Funders need to think deeply about root causes to society’s problems beyond just applying an ESG “checklist”. Members suggested that philanthropists should come up with their own ESG criteria and methods of assessment when deciding to invest in social enterprises to suit the individual contexts of their giving. Everyone agreed that more learning about impact investing and ESG approaches was needed, which APC could assist with.
The value of collaboration
Lastly, members recognised the value of collaboration for impact—with each other, and with other stakeholders, from experts to non-profit organisations and governments. Collaboration is best when it is organic, built on mutual understanding of each other’s interests, strategies, and appetite for risk.
Four initiatives supported by members were invited to present: Circulate Capital, which aims to remove plastic waste from the oceans and increase recycling efforts as part of efforts to combat climate change; Kaizenvest, which seeks to improve the quality of education through technological, pedagogical, and learning-engagement model innovations with maximum impact and affordability; Heritas Capital, which intends to launch the Asia Impact First Fund later this year that will provide capital to leading social enterprises; and POPO, which will focus on the areas of ageing, mental health and death and dying through funding effective companies working in this sector, building catalytic communities and starting difficult conversations. APC was pleased to bring together its members together reflect deeper into the motivations behind their philanthropy, as well as how to utilise all the assets at their disposal—from capital to voice, skills, time, networks and influence—in order to drive positive social change.