Since 2013, the foundations have invested an increasing proportion of their assets in green impact funds, which on the one hand are intended to counter climate change and on the other hand contribute attractive returns. We believe that it is possible to deliver on the double bottom line.
A significant proportion of the impact investments are placed in facilities for the generation of green power from wind turbines and solar cells as well as sustainably managed forests around the world. We also invest in green growth companies and startups at various stages of development. The facilities and the companies are selected by specialists in the various areas of activity.
Our goal for the period 2016-2019 has been to get the contractual commitments for impact investments to make up 10% of the foundations' tied-up assets – and that goal has been achieved. By 2023, we want to have increased this class of investment to 15%.
Key investments in the United States
The investments are distributed worldwide, focusing on the US, which, as the world's economic superpower, has a dynamic, innovative business climate and enterprises in all growth phases, ranging from small-scale start-ups to the world's largest multinational corporations. The US is consequently central to any investment portfolio. Historically, the US has enjoyed privileged access to energy and resources, which has led to heavy consumption of resources and dampened interest in green technologies. However, far from all US citizens, politicians and industry leaders share this relaxed approach to environmental concerns, and skyrocketing oil prices in the '00s and growing awareness of the threat posed by global climate change have gradually altered the picture and generated many investment opportunities with attractive impact potentials. Market mechanisms and the global economy ensure that technological advances in US companies will be applied worldwide.
Focus on green technologies
Our main investment area is the generation of renewable energy from solar, wind, biomass and hydropower sources. We have a total of 35 investments in this category, which break down into 16 from wind, 15 from solar, two from hydropower and two from incineration plants. Electricity generation based on coal, gas and oil emits significant amounts of CO2, so replacing black power with green alternatives has a substantial positive impact on the climate. In the coming years, we expect electricity consumption to increase as more and more processes become electricity-based rather than oil-, coal- and gas-fired.
The second largest investment area is sustainably managed forests in North America, South America, Asia and Australia. Forests can convert significant amounts of atmospheric CO2 into carbon, and they are therefore a vital means of combating climate change. Through photosynthesis, trees take up CO2, and store it in their trunks, branches and roots.
A significant proportion of the foundations' impact investments are placed with green companies and start-ups operating in various sectors such as transport, energy, industry and agriculture. The common feature of these ventures is that they are dedicated to developing, marketing and selling the green technologies of the future. The aim is to achieve profitability and gain access to markets across the globe, thereby maximising the positive impact on the climate through sales of the firm's products and services.
Three examples of impact investments:
A teaching case at Harvard Business School
The foundations' commitment to investing for impact was singled out as a case study for use in Harvard Business School's MBA degree programme.