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Norway’s Opportunity to Change the Rules of Global Investing

by

Lois Quam

The Nature Conservancy's Chief Operating Officer

April 2016

Norway. Photo @ Graham Jenkinson/Flickr.
Norway. Photo @ Graham Jenkinson/Flickr.

Our world faces new and unprecedented environmental and social challenges that require equally new financial institutions to meet the challenge. Building a new global system of impact investing is a key element of responding to climate change. Norway can be the country that leads this change.

Impact investments are routinely made in private markets through debt and equity vehicles. In each impact investing deal, the social impact is defined and then measured with the same rigor and discipline as financial measures.

Impact investing is not philanthropy. Returns are scaled to the risks and rewards in each deal. In 2015, JP Morgan and the Global Impact Investing Network reported that just over half of the deals target returns at market, nearly thirty percent target returns below market, and less than twenty percent target capital preservation alone.

At The Nature Conservancy, an NGO operating in 39 countries, we created an impact investing unit, NatureVest, to match investors with investment deals. These deals return principal or generate profit and achieve social returns in environmental protection.

For example, our Livestock to Markets deal in Kenya deal supports cattle herders who commit to good grazing practices. A company buys their cattle and sells the meat in Nairobi at premium prices. The price also provides conservation, education and healthcare monies. After a million-dollar grant proved this concept, we are expanding this work as an investment opportunity, across a region the size of Akershus flyke.

NatureVest is also using impact investing in the Seychelles to complete the first-ever climate adaptation debt swap. It will ensure that 400,000 km2—an area larger than the size of Germany—will be Marine Protected Areas within five years.

These are just two examples that hint at what is possible.

This is where Norway comes in. In 110 years of independence, Norway emerged from the German occupation unified; built the modern Norwegian social welfare state; built a Norwegian energy industry; built the financial institutions to prosper from it; and built systems that empower working women.

Norway has also played a central role in building global institutions such as the United Nations, NATO and GAVI.

Norwegians can do in impact investing what Norwegians have done before: build stable institutions for prosperity.

"As a Norwegian American, a business leader and former State Department official, I have seen up close what Norway has done at home and around the world."
- Lois Quam

What could this look like for Norway? First, it can mean putting the knowledge that exists in Norway to new use in defining social and financial impacts. Norway can build on its existing capacity just as Norway built its own oil and gas industry and now exports key knowledge and technology.

Second, existing networks can create the foundation for new ways of working and new institutions. Norwegians have worked together before to prosper in the wake of the occupation and to build the modern country. This is about prospering in the wake of global challenges and building the modern world.

Third, we need working sessions to surface a full-suite impact investing deal, and to grapple with the challenges in pricing risk, measuring social impact and co-investing across sectors. As a result, new groups within existing institutions and new institutions will arise to do this work.

Norway can be a global hub to do impact investing for Norway and from Norway. Stable Norwegian and multi-lateral institutions that benefit Norway and the world. Norway can be the modern world financial center for impact investing.

As a Norwegian American, a business leader and former State Department official, I have seen up close what Norway has done at home and around the world.

With so many others, my grandfather left Norway, a country he truly loved, for a quite unknown world full of adventure and hope. He had dreams that his grandchildren would have stable and prosperous lives. And like so many of the descendants of Norwegian American immigrants, his dreams were realized. What a generation—those that reist.

What a generation—those that stayed. The leaders during the war. The leaders who after the war, built modern Norway by raising the standard of living in the little mountain valleys, up the fjords, through the towns and cities across the whole country in ways that endure today. And then these leaders used their experience to work in Africa and around the world to raise living standards. What a generation.

Today we face new challenges and we need new leadership. This is the time for this generation of Norwegians to lead so. Creating new global financial institutions is a vital way to respond to the challenges of climate change and global distress. Meeting this challenge secures the future for the generations to come—prosperity and stability and, given climate change, survival.

Vi star klar.


Originally Posted on Conservancy Talk

April 20, 2016