Recent Natural Disasters: An Impact Investing Wake-up Call

by Mariana Garza

It’s strange to think that something positive can come out of the devastating weather events and natural disasters that have occurred as of late, or that the events themselves are what pushed investors over the edge to move capital somewhere where, yes, profits can still be made, and where positive impact can make a big difference.

Yet, this is exactly what has happened.

Hurricane Harvey and Irma not only left behind environmental destruction, but also massive economic destruction, wiping out nearly $200 billion of economic value. Unfortunately, this highlighted the lack of investment in sustainable infrastructure in the United States. This infrastructure not only needs to be sustainable in terms of longevity, but also in terms of how environmentally friendly these structures will be: will they be worked into the natural environment or will they inhibit habitats, will they add or subtract to the current CO2 levels in the atmosphere, amongst many other questions and concerns.

In response, the Environmental Defense Fund released the “Investment Design Framework”, a framework that will help local and state governments mobilize private investment. This is the first-ever organized written system that outlines how the private sector will fill in critical funding gaps. The report draws methods from already existing financial practices such as how DC Water uses Environmental Impact Bonds and how the New York Green Bank redistributes risk between private investors and public agencies to accelerate clean energy. This is where impact investing steps in, and I, along with the rest of HCIIG, am excited to see where this framework will take the field this coming year.

Stay tuned for updates!