New Cast of Characters
Last week the Collision Conference, one of the largest tech community gatherings in the world with 32,000 attendees, went virtual. Sustainability and climate were front and center: Kate Brandt, the Chief Sustainability Officer at Google, shared that in the 90 days leading up to Earth Day searches for “How to live sustainably” rose 4550%. Christiana Figueres, a Costa Rican diplomat who led the 2015 Paris Accord talks, shared insights on the false dichotomy between sustainability and cost saying “It’s about de-carbonizing the economy, not paralyzing it.”
Leaders across the world are acknowledging and taking part in the increased focus on sustainability and climate action that has grown from the pandemic. Amazon recently announced a $2B fund to invest in clean energy. The four biggest Private Equity firms in the world now all have ESG vehicles surpassing $1B in AUM. More and more data is demonstrating that businesses and funds with a focus on sustainability are outperforming their peers. One influential paper published by researchers at Harvard Business School, Oxford, and London Business School looked at 90 matched pairs of companies — one “high sustainability” and one “low sustainability” company from the same space. The high-sustainability companies significantly outperformed their counterparts in terms of both financial and stock market performance.
But while the financial performance is easy to compare, the impact of the companies is more abstract. ESG policies often focus on process, not outcomes. Financial statements are always audited, whereas independent third parties almost never vet ESG filings. The bar for a firm to be considered ESG is low. PWC reported that 91% of respondents to the firm’s annual survey indicated that they either have or are in the process of creating an ESG policy. As we see more money flock to impact investing because of strong performance, it’s pivotal that we hold those using the banner of impact and sustainability accountable to their mandate.
Active Impact Investments was founded as a BCorp because of our commitment to making a quantifiable difference for our planet. We hope you work alongside us and hold us accountable in our fight to ensure that our portfolio companies and our fund have a substantial and measurable environmental impact for our planet while financially outperforming the market for our investors.