Putting your money where the social impact is

April 01, 2020

Companies focused on social and environmental challenges, will soon have access to a significant new investment fund. KKR, the American global investment firm, has raised over $1.3 billion which it says is earmarked for companies that match purpose with profit. It will support growing start-ups and enterprises that intend to support the delivery of the United Nations Sustainable Development Goals (SDGs). The 17 SDGs aim to act as a blueprint for companies and governments to implement and monitor their contribution to the world’s most pressing social and environmental issues. The money will be invested in companies that use technology to enhance safety, address mobility and sustainability, deliver waste management solutions, create sustainable products and services, or address the environmental impact of existing industries.

The news of a large asset manager investing in purpose-led start-ups aiming to have a positive social impact, is always encouraging. The money invested by KKR’s fund for companies matching purpose with profit is likely to be essential for start-ups to survive and thrive, achieving SDG-related impact as they do so. However, it should be noted that KKR currently has $148.5 billion assets under management, meaning this $1.3 billion fund accounts for just under 1% of its potential. Perhaps a proportion of its recently raised $13.9 billion America fund, or $7 billion infrastructure fund, will also be used for sustainable companies with positive impact?

But at a time when JP Morgan Chase is restricting lending to Arctic oil and coal lending projects, and Norway’s $1 trillion wealth fund blacklists major climate culprits, it is no longer enough to only be backing the solutions. As necessary as it is to support companies trying to fix the world’s problems, investment efforts are depleted by also funding the companies that cause them.