From meat substitutes to clean living, impact investing is emerging as a source of healthy financial returns as well as a means of making lasting contributions to societal and environmental well-being. Here are five impact funds you don't want to miss out on
1. The Rise Fund
Backed by global figures such as Bono, Richard Branson and Laurene Powell Jobs, the US$2 billion Rise Fund was set up by TPG, one of the biggest private equity firms in the world, as a new global impact fund to invest in seven sectors: education, healthcare, energy, financial services, infrastructure, technology, and agriculture and food. The aims of the fund are aligned with the SDGs. UBS is the fund’s banking partner and received a global allocation of US$325 million for its clients, of which Asian clients could invest an aggregate of US$125 million.
2. Indonesian rubber
The Tropical Landscapes Finance Facility (TLFF) is a US$1 billion fund that BNP Paribas has arranged in partnership with the United Nations Environment Programme (UN Environment), ADM Capital and the World Agroforestry Centre. The TLFF’s first project is a sustainable rubber plantation in Kalimantan, Indonesia, owned by RLU— a joint venture between the French multinational tyre-maker Michelin and Barito Group, Indonesia’s leading integrated energy company.
The US$95 million sustainable project bond was issued in three tranches, one of which saw good interest from BNP Paribas’ wealth-management clients in Asia. The project will employ 16,000 people, create livelihoods for surrounding communities, rehabilitate badly degraded land and protect wildlife conservation areas, while complying with four SDGs. The first 18,100 hectares of rubber were planted by December 2017.
3. Meat substitutes
The market for plant based foods, which some believe could be worth more than US$1.5 trillion, gained an exciting new entry with the launch of Impossible Foods in 2011.
Impossible Foods has raised US$450 million from firms and individuals such as Khosla Ventures, Bill Gates, GV (formerly Google Ventures), UBS, Viking Global and Open Philanthropy. Some of its largest investors are from Asia, including Li Ka-shing’s Horizons Ventures, Singapore’s sovereign wealth fund Temasek, and Sailing Capital. Impossible Foods’ burgers and other meat-like dishes have reached restaurants in Hong Kong and Macau, the company’s first overseas markets outside the US.
“Impossible Foods was founded to create the most delicious meat, fish and dairy foods the world has ever experienced, all directly from plants,” says Nick Halla, the company’s senior vice-president, international. “It is the only company with the technology platform to outperform animals for food production. We have spent more than seven years developing the platform and first product.”
Though privately held, the company welcomes investment from the right people. Halla adds: “By investing in Impossible, investors not only have huge financial opportunity, but also an opportunity to leave a lasting positive impact on the global environment. We are quite selective in finding the right investors for our mission and financial success; we are always open to connecting with the right long-term financial partners to help accelerate Impossible’s growth.”
4. Smart energy opportunities
Transport and energy, and how quickly they are changing, present more chances for private investors to make both money and a positive impact. Private money is one impetus for investment, but when this is backed up by public-sector support, it is a powerful sign that something is more than a passing fad.
“The fight against climate change has driven significant government policy focus on the development of electric vehicles, and we see very attractive opportunities in innovation in batteries and electric vehicles,” says Fan. “Companies directly exposed to the electric revolution, including electric-vehicle makers, will continue to benefit from the long-term transition from diesel to electric vehicles.”
The evidence suggests she’s right: the latest International Energy Agency statistics show that global electric vehicle sales are on target to reach the objective of 5 per cent of passenger cars by 2025.
“These would continue to drive stronger than market-average earnings growth for those companies exposed to structural growth trends. Both equities and bonds issued by companies exposed to structural growth trends would bring very interesting investment opportunities for our clients.”
Kanol Pal, of BNP Paribas Wealth Management, also highlights smart transport and energy as sources of strong investment returns.
“In 2017, 60 per cent of the global investments in renewables were made in Asia-Pacific. Energy efficiency, electric vehicles, renewable energy and energy storage will attract trillions of dollars of investment by 2030, so there are many investment opportunities out there which relate to clean and smart energy.”
5. Clean living
Fan Cheuk-wan from HSBC Private Banking says the bank’s four sustainable investment themes provide its clients with opportunities to make good financial returns as well as a positive impact on the world.
“We see interesting new sustainable investment opportunities under our theme Clean Living in companies which provide recycling solutions. With much of Asia, Africa and the Middle East still suffering from water scarcity, we expect a substantial increase in infrastructure investment in water conservation projects and water treatment solutions.
“In recent years, the massive media attention on plastic waste underpins significant government attention on the environmental efforts to fight it, and we form a positive investment view on companies which provide potential or permanent solutions.”