Sustainable investments in the natural resources of the future
Finnish technological prowess could be harnessed to solving many problems in developing countries, such as the lack of clean drinking water and working toilets. What are the barriers to market entry for Finnish companies? That was the theme of a seminar held on 21 May for the Finnish network on international natural resource policy.
Dwindling natural resources and management of climate change require enormous global investments. To paraphrase old financial wisdom, the smart money goes for the highest possible return that promotes efficiency, wise use of resources and competitiveness of capital. Another incentive for impact investing is to generate desirable social or environmental impacts.
Socially sustainable enterprise
Some contributors to the discussion on natural resource policy and the forestry and water sector saw impact investments in sustainable businesses as a potential solution to solving the world’s development challenges.
It’s a long road from traditional development cooperation to impact funds, however, and there are many challenges to tackle on the way. Mikko Halonen of Gaia Consulting Oy believes that the greatest difficulties relate to finding suitable projects, measuring impacts and comparing different kinds of projects.
An impact needs a market – it needs to solve a problem
Only three per cent of the Earth’s water resources is fresh water and therefore drinkable. Water resources are unevenly distributed, fresh water being scarcest in Africa, Asia and the Middle East. The challenges involved in using private capital are more difficult in the water sector than in an industry based on sustainable forestry.
“The decentralised Finnish funding system perpetuates internal competition on domestic markets and fragmentation of expertise. Just as the goals of sustainable development should be viewed as a whole, so funding and development work should be constructed jointly by the public and private sector working towards a common goal,” said Jaana Husu-Kallio, Permanent Secretary of the Ministry of Agriculture and Forestry, summing up the lessons learned at the seminar.
Impact investing is the fastest-growing form of sustainable investing. The Global Impact Investing Network, which monitors the impact of investments by major institutional investors, estimates the global market value of impact investments in 2017 at USD 228 billion. Will impact investing lead to a paradigm shift in attitudes to investment, as the World Economic Forum has predicted?
Roadmap (in Finnish)
Online recording of the roadmap release event (in Finnish)
Timo Halonen, Ministerial Adviser, Ministry of Agriculture and Forestry, tel. +358 295162411, timo.halonen(at)mmm.fi
Seppo Rekolainen, Director of International Water Cooperation, Ministry of Agriculture and Forestry, tel. +358 295162086, seppo.rekolainen(at)mmm.fi
Max von Bonsdorff, Director of Unit for Development Finance and Private Sector Cooperation, Ministry for Foreign Affairs, tel. +358 295 351 720, max.vonbonsdorff(at)formin.fi
Mikko Halonen, Leading Consultant, Gaia Consulting Oy, tel. +358 407002190, mikko.halonen(at)gaia.fi