The Search For Best Practices

How can investors, civil society and project developers collaborate to reduce risk and maximize positive impact as it relates to social factors in infrastructure? To explore this multifaceted issue, Goal 17 Partners convened a panel representing investment and civil society stakeholders.

Moderated by Professor Patrick Schena, Professor of International Business at the Fletcher School of Tufts University, the discussion focused on how investors and other stakeholders bridge the global infrastructure financing gap while also protecting and improving local communities.

Tierry Deau of Meridiam distinguished between risk mitigation and impact, saying: “Risk mitigation is the minimum requirement, while impact is above and beyond this risk protection.” For Meridiam, he sees no tradeoff between impact and returns, as his firm communicates to investors from the start about expectations of financial and non-financial return, and how this is measured by fund managers.

Louis Downing spoke in depth about GIB’s philosophy regarding measurement and the question of tradeoffs. For example, Downing said, “if measuring strictly by SDG targets,  you would need another mechanism to ensure the project is creating more good than harm.” Downing also pointed out the ways in which infrastructure projects can produce exceptional returns when social considerations are prioritized, such as how a women-only car service improved revenues and revenue stability by accommodating a previously untapped market.

Eva Zabev of Business for Nature asked those present to consider the broader view of social factors, and whether current standards are quantitative measures rather than impacts: “As we think about how we measure social impact, can we value the actual worth of it? For example, when measuring job creation, we need to ask, what kind of jobs, are these better jobs?” She proposed inclusion of natural infrastructure such as forests in this dialogue, given the clear  “win-win.”

Jim Pass, Head of Project Finance at Guggenheim Partners, believes that interest in social risk and impact will accelerate in the coming years, citing the history of environmental assessments as precedent. Citing Guggenheim Partners’ research partnership with GIB, he remarked that “having this information will help accelerate the definition of standards to create a global infrastructure asset class.”