London – Seeking sustainable alpha in finance’s capital

Since the Big Bang (of Margaret Thatcher, not universe origins) suddenly deregulated the city’s financial markets in 1986, a compelling blend of money, talent, and innovation have responded to London’s calling by flocking to this financial hub.

During our visit, we had the opportunity to meet with a number of companies deploying capital that seeks triple bottom returns: sustainability-focused asset managers, VCs, and impact investors. The growth of investment “in search of purpose”  – and/or “not doing harm” – is fueling innovation both within the space of investing (asset managers employing machine learning and ESG big data, for example) and through their investing activities (backing startups addressing market opportunities around sustainability).

Pioneers of this sustainable investing scene in London include none other than Al Gore who launched a sustainability-focused investment fund back in the early 2000s. The politician-turned-climate-advocate was so optimistic about prospects of sustainable investing (which he defined as “improving quality of life without borrowing from the future”), that he declared it to be the “single largest investment opportunity in history… (with the) magnitude of the industrial revolution but the speed of the digital revolution.”

Perhaps the revolution is not yet fully underway, but “socially conscious funds” (or those that incorporate non-economic factors into their investment guidelines) are on the rise. According to Morningstar, such funds managed $1.2 trillion at the end of 2018

We learned when it comes to investing, companies have their unique approach to and definition of “sustainability” – a doubled edged sword for a sector trying to establish credibility with a broader investor community. 

Looming threats (Brexit, recession) will also be a good test of this growing sectors’ resiliency, though based on our conversations, we’re optimistic sustainable investing will only continue to gain steam.

Here’s a rundown of who we met:

Finance

Osmosis Asset Management: We spoke with founder and CEO Ben Dear and team about how his company is targeting above market returns anda reduced environmental footprint by incorporating a proprietary “resource efficiency” factor in their investment framework. 

Arabesque: This asset manager is using machine learning to ESG big data to create a rules-based approach to stock selection. Gabriel Karageorgiou, a partner at Arabesque explained how they are leveraging over 200 ESG metrics from more than 50,000 sources to make sustainable investing smarter and more accessible to everyday investors.

LeapFrog Investments: Associate Director of the impact investors’ newly formed “Impact Labs” , Roshni Bandesha shared how this established player in the impact investing space is “Fighting the fight fund by fund to demonstrate that there is no tradeoff between profit and purpose.”

Green Angel Syndicate: Founding partner Bekir Sami Acar (who manages investments in clean energy for his day job with Iconium Partners and Claritas Investments) helped launch a growing network of 200 members (the first of its kind in London) investing in startups addressing sustainability.

Startups

Winnow: INSEAD alumn Marc Zornes explained how his company is leveraging AI to help kitchens (hotels, restaurants) reduce food waste. 

Daring Foods: CEO and founder Ross Mackay shared how his startup is anything but chicken in taking advantage of the tremendous market demand for plant-based alternatives.

Small Robot Company: Co-founder Sam Watson Jones explained how his “robots as a service” model can improve farming practices by reducing environmental impacts and improving farmer wellbeing.

Fresh Check: Two science PhDs and co-founders – Alex Bond and John Simpson – explained how their simple and low cost solution to identify bacteria in food and on surfaces.

Good Food Institute: We spoke with Matt Ball, who shared how his organization is offering strategic support to startups, investors and scientists working on sustainable food innovations – specifically alternatives to animal products (clean meat, plant-based protein).

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