HOW DID YOU GET INTO IMPACT INVESTING?
My path to impact hasn’t been linear but looking back now I can see a few strong latent influences that led me to this choice.
I grew up in India – across several different states – and witnessed first-hand the impact of issues related to poverty, hunger and lack of basic services like electricity and running water. As the country’s economic development picked up in my teen years, I also began to notice its impact on the environment – from greater air pollution in the cities to water contamination further afield.
Fast forward to 2011, after a decade and a half in the private sector, I went to work for the World Bank (IFC) where I was asked to be the Climate Funds Lead. It was a daunting proposition. Investment returns for Climate Investing across the board were challenged for a variety of well-known reasons. And yet, the climate problem had only become more urgent. As I didn’t have a long background in climate investing at the time, I was able to take a very clinical view of how to structure a commercially viable programme that could help address the existential climate crisis. I had previously worked in the strategy team at Morgan Stanley so watched with great interest how the firm had decided to approach Sustainable Investing in a very ambitious and thoughtful way. Going back over a decade, first the Global Sustainable Finance group and then the Institute for Sustainable Investing was set up, not as a side project or a CSR initiative, but very much at the heart of everything the firm did. The premise was simple: a problem of this magnitude would require mainstream financing through multiple sources. While at the World Bank, we were always talking about mobilizing private sector capital, so I believed by joining Morgan Stanley Investment Management I would be embodying that goal. Today we have committed over a billion dollars in investments across sectors ranging from EV charging infrastructure in the UK to solar financing in India to food waste reduction technologies in California.
We began this journey before the SDGs were established but now we have this vivid and useful language to conduct this discourse. To me, SDG 13 is the paramount goal. The climate clock is ticking and 2050 remains the one goal that concentrates many minds. Morgan Stanley has committed to the 2050 net-zero financed carbon emissions goal. Our work does, of course, deeply impact many other related SDGs. For example, Morgan Stanley’s Plastic Waste Resolution, a firm commitment to helping prevent, reduce and remove 50 million metric tons of plastic waste from rivers, oceans, landscapes and landfills by 2030, is related to SDG 14 and 15. In addition to this, our work in food waste reduction has impacts on SDG 1, 2, 3, 11 and 12. So they are all connected.
I’ve been fortunate to be given some very interesting opportunities from creating a strategy for an NGO educating children who were living on the streets in India to helping mobilize capital in some of the most fragile, post-conflict economies in Africa and South Asia. The experience that is the most humbling was the chance to work with an order of Catholic Sisters in the US to create a pioneering climate impact strategy. Inspired by the Pope’s encyclical, Laudato Si, this courageous group of women (Dominican Sisters) was willing to commit to a climate investment strategy at a time when many mainstream investors were on the sidelines. Working together with Graystone Institutional Consulting in Chicago and Morgan Stanley’s Global Sustainable Finance team in New York we set out to craft a strategy that was authentic to the climate mission of the Dominican Sisters but also made no concession to returns which were necessary to fund pension obligations for these groups. The non-traditional approach to climate (backing everything from car sharing to orange farming) and the focus on private equity returns subsequently brought in more traditional pension funds and foundation investors.
I love my job and feel fortunate to be able to work with thought leaders at Morgan Stanley but also within our portfolio companies and the wider market. There is a breadth of topics we discuss and engage on, whether it’s electric jets to lab-grown burgers to figuring out how to encourage more people to commute by bicycles. When you see the sheer hard work of people as well as the creativity and diversity of business models trying to meaningfully solve the climate issue – on a daily basis – you can’t help but feel hopeful about our future. Each of us realizes we are trying to tackle a very urgent issue for the planet.
Firstly, I hope to see a continued interest globally, with groups allocating more capital to climate solutions (our estimates suggest —accounting for those who have already made public commitments – the figure is close to $30 trillion). This requires a mindset shift from carving out capital for climate solutions to requiring climate impact from mainstream asset allocations. Second, I would like to see a greater ambition with respect to the actual primary impact these allocations achieve. For example, how many Gigatons of carbon are being reduced through an investment strategy? Third, and related to previous points, I would like to see more capital going into solving the most challenging problems – setting aside the now irrelevant debate about reduced returns and trade-offs - as there needn’t be any. I think impact investors need to push the boundaries in exchange for a potential out-size impact on the environment and returns for investors. This requires scale, which pulls me back to my first point about an acceleration of interest in impact initiatives globally.
Morgan Stanley’s Alternative Investment Partners (AIP) Private Markets team provides investors access to broadly diversified and thematic multi-manager portfolios, secondaries, co-investments, impact investing strategies and custom solutions.