Over the last decade in impact investing, it has been my observation and belief that emerging markets continue to face significant problems: inequality, hunger, environmental issues, and resource scarcity. Traditionally, these problems are addressed via government initiatives, sovereign funds, and philanthropy. However, these sources are not enough to address all of the capital needs of developing markets, so many have now turned to the dynamism and innovation of the private markets to tackle these complex global issues.
One relatively new capital source has evolved from socially responsible investing: impact investing. This refers to investments which seek to make social and environmental impact while still delivering attractive market-rate returns. It involves actively seeking to invest in companies or projects that have the potential to create positive economic, social, and environmental impact.
For much of the past decade, impact investing was more of a niche activity. This is now changing and the view that an investment can consciously achieve both a financial return and create positive social or environmental externality is rapidly becoming mainstream.
As an impact entrepreneur, I am dedicated to finding ways to use capitalism to solve problems in emerging markets. In keeping with that philosophy, I have recently joined the Board of TriLinc Global as a Senior Advisor, and it is proving to be one of the most rewarding experiences in my life. TriLinc provides investors with what we believe to be lower-risk access to private investment opportunities available in select high-growth economies in Latin America, Southeast Asia, Sub-Saharan Africa and Emerging Europe.
Below are what I believe to be compelling examples from our most recent investments in some of the different regions in which we invest.
TriLinc has provided financing to a family-owned bread manufacturer in the southeastern city of Tulcea, Romania. By financing the company’s related capital expenditures, TriLinc will support the completion of a new fully-automated production line to more than double the company’s production capacity for frozen bread and pastries, support the addition of 50 new employees to operate the new production line, introduce new energy-efficient equipment to cut energy usage by 20%, and support a 1.25 MW solar PV farm that has the potential to supply surplus energy to nearby homes and businesses in need.
Another example of TriLinc’s impact can be seen in Mexico, where TriLinc provided financing to a Waste-to-Fuels Processor converting municipal solid waste (“MSW”) to low carbon jet fuel. For each new recycling and processing plant constructed, approximately 525,000 tons of MSW feedstock will be converted into 31.5 million gallons of syncrude, which will later be converted into renewable jet fuel. The company is diverting large volumes of waste from local landfills and reducing greenhouse emissions.
Additionally, TriLinc has provided financing to a resource trader in Hong Kong. This borrower operates in Indonesia, supporting sales to a large Indian multinational infrastructure company positively impacting the broader Southeast Asia region. This investment ultimately supports the Indian Government’s “Power For All Initiative” which aims to provide adequate, uninterrupted electricity for all households, industries and commercial establishments in India by 2019. The borrower supports job creation and local economic development in Indonesia through it suppliers. Activities such as hiring local vendors, land removal, and road maintenance help create employment for over 1,000 people per supplier.
In my view, we are beyond the “vision” for a better tomorrow. We are on a global transformation, rethinking the ecosystem, investing in sustainable impact, and securing a better future.
Purpose-driven transformation and innovation are disrupting the global landscape through impact investments. Global leaders and impact investors are working hand in hand, to take what we do well and use it to do good.
Good news... the world is getting better.
Barbara D’Amato (OPM 27, 2008) is an Advisory Board Member at TriLinc Global, a global sustainability and impact fund sponsor.