NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, November 21, 2018

By Rob Day

Could sustainable investing be at a tipping point?

For a long time entrepreneurs, investors and advocates of sustainable investing have spoken longingly about the $2 trillion of institutional investor dollars that have been reputed to be sitting skeptically on the sidelines, teasing everyone with the prospect of finally putting their sizeable investment muscle to work to scale the sector. Throughout this period, institutional investors have argued that they have withheld their dollars over sound investment concerns with the sector – the investment size required were too small for large institutions; you had to sacrifice returns to get impact; or the deals were simply too hard to source (to name just a few).

Many of these concerns were and, in some cases, still are well founded. Many of the sustainable investment opportunities are specialized, smaller scale opportunities that simply just can’t absorb greater levels of capital without significantly changing their models and adding more risk.

Photo courtesy of Pavel Ahmed.