Attracting Traditional Investors to Impact Investing

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2013-04-18

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Mayer, Frederick

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Abstract

Research Question: 5 Stone Green Capital (“5 Stone”) seeks to fund green real estate investments by attracting capital from both traditional and “impact” investors. The impact investing space is relatively new to capital markets, and traditional investors are skeptical of the risks on investments accounting for anything other than financial returns. 5 Stone wishes to explore how to draw traditional investors into the impact investing space.

Given its emphasis on generating optimal sustainability in energy, housing, food and employment markets, while generating consistent economic returns, and the constraints of an evolving impact investment market, how can 5 Stone draw traditional investors into the impact investing space?

Recommendation: With the underlying goal of bringing traditional investors into the impact space to fund its green real estate investments, 5 Stone should pursue Generation Investment Management’s model of “sustainable capitalism” that incorporates profitability and sustainability into its long term strategic planning. 5 Stone’s target investors from traditional financial markets will accept few tradeoffs for maximum financial returns. While both the patient and sustainable capital models provide examples of profitability and long term visions for impact, only Generation seeks above-market-rate risk returns on investment.

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Matheny, Wendy (2013). Attracting Traditional Investors to Impact Investing. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/6653.


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