The Yale International Center for Finance hosted the second annual Yale Impact Investing Conference on April 5. The conference was planned and organized by MBA for Executives students Julie Cochran ’20, Vish Mazumder ’20, Ryan Barry ’20, Caleb Cheng ’20, Martha Deeds ’20, June-Marie Fitzmartyn-Innes ’20, Paul Fu ’20, and Bill Peng ’19 and explored the transformative power of capital to change the world through investments that consider both financial returns and positive environmental, social, and governance (ESG) impact. The conference brought together investors, academics, and philanthropists who engaged in stimulating discussions about public and private market investment opportunities that have the potential to generate both market-level returns and positive benefits to society and the planet.
Teresa Chahine, the Sheila and Ron ’92 B.A. Marcelo Lecturer in Social Entrepreneurship, kicked off the conference and introduced Robert Shiller, Nobel Laureate and Sterling Professor of Economics. Professor Shiller gave attendees a sneak peek into his research on economic contagions and discussed why impact investing may be a significant trend like other “contagions.”
Keynote speaker Erika Karp of Cornerstone Capital challenged Professors Shiller’s suggestion that impact investing is a hybrid of investing and philanthropy, arguing that impact investing is simply investing, and that market-level financial returns do not need to be sacrificed to achieve positive impact through investments. Karp facilitated a panel of seasoned investment professionals from hedge funds and private equity companies. The panelists, including Rob Brown of Atlas Impact Partners, Diana Propper De Callejon of Cranemere, and Tony Davis of Inherent Group, had a spirited discussion about different models to generate alpha while integrating ESG criteria into investment decisions.
Students organized the panels using the United Nations Sustainable Development Goals (SDGs) framework to explore several key sectors that are currently in need of significant capital and have a demonstrated history of generating market-level returns. Julie Cochran ’20 facilitated a panel of industry leaders from Ivanhoe Cambridge, Neighborly, and Arctaris Impact who discussed ESG challenges and opportunities related to community development, infrastructure, and opportunity zones. Sri Muthu ’16 facilitated a panel with representatives from Merck for Mothers, 4Catalyzer, and Yale New Haven Health. Panelists discussed innovations in healthcare delivery and devices that have the potential to reach billions of people through the cooperative relationships being formed between for-profit and nonprofit organizations. Scott Fischer ’98 facilitated a panel on green energy featuring speakers from New Energy Capital, Generate Capital, and Energy Impact Partners, which examined investing in the transition to the clean energy sector and the challenges and opportunities of large-scale clean energy projects that often require high initial capital requirements.
Hans Op t Veld, head of responsible investing at PGGM, closed the conference—the largest gathering of impact-focused investors at Yale—by describing the challenges of prudently investing more than $15 billion AUM in four principle focus areas – clean energy, clean water, healthcare, and food—to achieve market returns while generating positive impact.
We observed the following industry themes:
- There is still ambiguity among investment professionals and observers regarding the definition of impact investing. Some speakers view all investments as impact investments, with the investor taking a role in encouraging responsible behavior by companies in which they invest. Others have a more well-defined view of what is and what is not impact investment and have developed methodologies for determining which companies qualify as impact investments.
- Investors and companies are adopting the U.N. Sustainable Development Goals and using them as a framework for discussing the major issues requiring significant capital and solutions, but impact measurement continues to be an area for improvement.
- Individual investors, particularly millennials, are more and more interested in responsible investments, consistent with their values. However, unqualified investors are excluded from private capital investments, and many of the most interesting impact investments remain in the private markets.
- The industry is still a nascent field, but is evolving despite barriers to scale.