The Johnson Graduate School of Management and the Kellogg School of Management have joined forces to launch the 2011 International Impact Investing Challenge. This competition is unique because it challenges MBA students to solve the world’s biggest problems – poverty, climate change, ecosystem degradation – with innovation and entrepreneurship.
The competition will challenge MBA students to achieve economic returns that support progress on global impact issues. Teams from a dozen top MBA programs are competing for more than $40,000 in awards in a final event at J.P. Morgan in New York City on April 8.
The International Impact Investing Challenge is an invitation-only pitch competition focused on designing investment vehicles that create sustainable impact and are of the size and scope that would be of interest to institutional investors. Students are challenged to propose and defend a sustainable investment strategy for an institutional investor that has a $10 to $50 million mandate for making sustainable investments.
Twelve MBA programs will be invited to send one team to represent their program at a final competition at the J.P. Morgan headquarters in New York on April 8, 2011. A selection panel of experienced investors and officers who currently manage family foundations, pension funds, university endowments, etc. will review the pitches. Judging criteria rewards high performance, sustainability-driven investments. Portfolios will be judged for an understanding of the interdependence among business, society and the environment for a competitive advantage.
An increasing number of institutional investors have recognized an opportunity for a sustainable investment mandate within their portfolios. Specifically, the investors seek to identify investment strategies that can meet the financial needs of the organization by investing in established businesses, new ventures, or other investment vehicles that are consistent with the principles of sustainability. Emphasis will be placed on creative strategies that integrate environmental, social or corporate governance (ESG) issues into the investment process. The officers will consider a broad range of strategies, from those focused on global concerns to those that give attention to local communities. The best proposals will offer a novel investment strategy over current approaches. Teams are encouraged to think beyond venture capital fund vehicles & strategies.
Institutions seeking investments may include but are not limited to:
- University Endowments
- Retirement and Pension Funds
- Family Foundations
Assume all institutions have earmarked $10-50 million for this new mandate and are now seeking proposals for investment. The institutions are looking for a clear articulation of an investment strategy that addresses the following criteria:
- Investment is designed to generate both competitive returns and positive social and/or
- environmental impact.
- Risk management is commensurate with target returns.
- Investment is attractive in respect of size and scope to institutional investors with a $10M mandate.
Performance metrics for both the financial and social return components are transparent and well-defined, demonstrating clear linkage between program outcomes and social impact. Particular consideration will be given to strategies that design a portfolio that balances risk and positive returns related to financial, environmental and social factors. The institutions are open to multiple asset classes, including but not limited to:
- Public equities
- Private equity/venture capital
- Real assets
- Fixed income securities
- Microfinance lending and investing
Any strategy should consider the following issues:
- Who are the potential investors and how/why does the vehicle fit within their strategy
- Potential volatility of market value
- The lock-up or time commitment required
- Financial returns
- How the strategy fits within the target institution’s portfolio
- The larger scale environmental and social impact of the investment
The Challenge is looking for innovative investment ideas that balance the tension between financial and social return rather than sacrifice either priority. There is no limitation on asset class or investment vehicle and teams are encouraged to think creatively. The focus is on investment vehicles and fund strategies versus companies.
More than $40,000 in prizes will be awarded to the winning teams. Awards will be made for overall proposals as well as those that excel in a specific categories including health, environment and emerging markets.
The First Prize in Environmental Sustainability will recieve a $10,000 McCall Foundation Award.
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© 2011, Richard Matthews. All rights reserved.