Making an impact – best practices
In April this year, we helped interested foundation representatives and asset managers delve deeper into the concept of impact investing. While the focus was more on basic understanding, in October, we presented established, successful practical examples in a follow-up event, again together with Intalcon.
There are many reasons for impact investing. Global warming, species extinction, and the decline of democracy are just a few of the major challenges of our time that require rapid solutions and the help of us all. Private capital can also have a targeted social impact. For foundations whose funding objectives address today's challenges, impact investing also means multiplying their performance, enabling them to contribute to the solution actively with an impact-oriented investment strategy. ‘Impact investing must become mainstream,’ demanded Scarlett Eckert, Managing Director of the Intalcon Foundation, in her keynote speech.
Patrick Kern, referent for sustainable asset management, gave an exclusive insight into the investment strategy of the Umweltstiftung Greenpeace (environmental foundation). Even when weighing the costs and benefits to third parties, it focuses on diversification, spreading its capital across liquid investments, private markets, and direct investments, such as social real estate and forests. For the latter in particular, however, a shift in thinking towards long-term investment horizons of 50 years and more is necessary.
Both presentations sparked an extensive round of questions and critical discussion among the participants, which continued later in the evening. But first, there were three different breakout sessions.
Tobias Karow, founder and managing director of stiftungsmarktplatz.eu, took a look across the pond in his sessions, where impact investing is an integral part of asset allocation and requires neither explanation nor lobbying. While in this country, investment horizons are measured in calendar years and investment guidelines for foundations are restrictive, in North America, the focus is on the long term and on opportunities. There is, therefore, much that German foundations can learn from the so-called Yale model.
While traditional investment funds are increasingly reaching their limits in terms of returns for foundations, and alternative funds, microfinance funds, and green bonds promise more impact than they actually generate, Intalcon is taking a different approach. Twenty per cent of all income from Intalcon investment funds flows directly into biodiversity, climate, and marine conservation projects via the Intalcon Foundation. Klaus Wobbe, founder and managing director of Intalcon & Intalcon Asset Management, introduced a model in his sessions that converts capital into social benefits – here and now.
Philipp Klotz, our founder and CEO, took participants on a journey into a world that was partly unknown to them. Polytone offers an innovative model of cultural impact investing. We offer classical musical instruments as an asset class for investors and promote up-and-coming young musicians by renting out these instruments. The sessions confirmed our experience to date: prominent asset managers endorse and support our concept, and representatives of well-known foundations are also showing great interest and willingness to invest, especially after learning that string instruments retain or increase in value and must be played to do so.
After the extensive input, there was a great need for exchange and further discussion, which was satisfied afterwards with snacks and drinks in the relaxed atmosphere of the SPACE of the Hamburg Kreativ Gesellschaft.
It remains of utmost importance to continue to make impact investing socially acceptable. We will continue to actively support the mission of the Bundesinitiative Impact Investing in the future.