Serhiy Vaskov, Managing Partner of Eska Capital, Financial Expert
Is Impact investments just a fashion trend or a well-thought-out strategy to save our planet and way of life? The impact of investment on climate change: helping to fight poverty, tackle inequality – is attracting increasing attention from both leading investment companies such as Black Rock or Goldman Sachs, managing Family Offices around the world, and private investors with relatively small capital. In the last 12 months, people have been talking about the impact of investments more than in all previous years.
In 2019, I attended 5 financial conferences around the world and all focused on impact and esg investments.
Why is this important?
Impact investments are investments that are made to create a positive, measurable, social and environmental impact along with a financial return. The question arises: does Impact investments make sense? Do they give a tangible return or is it a fashionable kind of charity?
The schedule is such that many people come to the conclusion that charity does not work. Issues of quality education, water pollution, public access to clean drinking water and quality medicine are not advancing.
We are all already experiencing climate change. Air pollution and the connection between chronic diseases have already been confirmed by doctors and scientists. We understand that further widening the gap between rich and poor (even greater than between the middle class and the super-rich, for both people and countries) could lead to social upheavals and violence, as we have seen in the United States for several years. weeks. The unrest in the United States should be considered and analyzed in the light of rapidly growing inequality in the world’s largest economy.
A new approach is needed to change the schedule.
The idea of Impact investments combines an in-depth analysis of traditional investments and the pursuit of maximum profits, but at the same time has a positive impact on the acute challenges of the environment and resource allocation. Given the serious problems, and in some cases the irreversible damage, that the world faces, there are long-term and fundamental changes in society. And now clients of hedge funds and investment companies are increasingly asking the question: what is the impact of their investments? Many do not want to invest in new mines in Indonesia, but prefer to invest in wind farms in Sweden and solar power plants in Ukraine or Japan. This shift means that it is no longer acceptable or viable for a business to prioritize only profit maximization,investment of material assets of the company will be carried out taking into account the requirements of time.
Impact investments have a clearly defined structure and parameters based on environmental, social and governance criteria (ESG). In world practice, ESG-principles of doing business are no longer just a fashion trend and are already coming to the fore in assessing the prospects and risks of companies. In Ukraine, business is still at the beginning of this path, it is just learning to build systematic approaches to sustainable development.
Why is sustainable development important for Ukraine?
The Sustainable Development Goals (SDGs), developed by the United Nations, are primarily a comprehensive, coordinated program designed to help address the major social, environmental, and economic challenges of humanity.
If the company’s main goal resonates with one or more of the 17 UN countries, it gives it the opportunity to clearly and in accordance with generally accepted standards to indicate its contribution to society and investors.
Issues of water pollution, deforestation, responsible agriculture and air quality for Ukraine are no less acute than the war in the east.
Why is sustainable development important for investors and individuals?
The better, more modern and smarter infrastructure around, the better and more pleasant to live in society. Closed borders showed that you can get stuck in one place for a long time and you want it to be as pleasant as possible.
Manifestations of UN support can be expressed not only in waste sorting and responsible consumption. You can invest in companies that meet Zur’s criteria.
Even if 10% of Ukrainian citizens who keep money on deposit, in IGLBs, in a bank safe or under a mattress, when choosing the instruments for investing money will take into account the impact of their investments on combating climate change / emission reductions, we will see significant changes in the economy. and in the ecology of Ukraine.
How can Ukrainian investors try impact investments?
Now, in the absence of a developed market, the best tool is corporate bonds.
Previously, our company issued corporate bonds, which proved to be successful and in demand among investors.
Now we are close to the next issue. And most likely, given the interest of investors, then a series of issues.
And if at the first issue (and this was one of the first market issues of corporate bonds in 10 years) our task was to re-introduce this tool to the market and return interest in it and faith. So now we want to convey to investors that we can focus not only on the rate of return, but also on the positive multiplier that can lead to investment.
Long-term investment, the availability of which is limited in Ukraine, especially for small and medium-sized enterprises, will enable enterprises to purchase energy-efficient equipment and upgrade equipment. Reduce exhaust emissions, and reduce crop losses.
For several years, Esca Capital has been building its work in accordance with the principles of sustainable development. Investing not only in the development of small business, but also in promoting the development of local communities. Concerned about the financial literacy of entrepreneurs, we tell how business can have a positive impact on the world. We help the environment to become better by providing funding for the renewal of equipment, we plant a tree for each signed lease agreement.
By 2025, we plan to significantly reduce emissions by taking measures to prevent their formation and reduce them.
Agriculture is one of the main sectors involved in the global debate on climate change. In Ukraine, more than 80% of the fleet is obsolete, and in order to catch up with Europe, it is necessary to invest about $ 2.5-3 annually in its modernization. Due to the lack of new equipment, our country annually lacks more than 6 million tons of grain. Add to this the problems with efficiency in animal husbandry.
Another important goal of sustainable development is decent work and economic growth. I believe that meritocracy is the best philosophy in business. That is why employees must have equal career opportunities regardless of gender / orientation / views. For clients, we provide equal access to finance, creating jobs, ensuring the operation of the social protection system through taxes.
You should also implement an education system for your employees, clients and partners. The company should be interested in the development not only of its immediate staff, but also of those professionals who are involved in working with the company’s services.
By supporting the implementation of the tsur, we will be able to ensure a stable economy and further economic growth, which is a structural source of financial income for any long-term investor.
After our issue of corporate bonds a few years ago came the issues of many companies (Ukrposhta, several banks and leasing companies, Nova Poshta, EVA retail chain and others). We hope that after this issue of our bonds, Ukrainian companies will start using at least some of the goals of sustainable development.
In this way, companies could benefit not only their business, but the environment and society. The only way to ensure a better future is to work towards achieving the goals, based on a win-win strategy for all.