Module 2 – Is it Impactful Enough?

What investments have you come across, participated in, or are considering that you believe embody CST Principles?

I sincerely enjoyed this module and find ESOPs a no-brainer in the world of impact investing. It seems like a wonderful way to promote employee participation, unlock the entrepreneurial spirit and democratize ownership. With that understanding, I am choosing to write about the real estate assets in transition instead of ESOPs, and posing the question “is this impactful enough?”

I recently came across a fund that [often] sources real estate from churches in Canada. The use of the proceeds tend to go to the church’s community outreach and related programs. The fund then repositions the land into environmentally sustainable mixed use buildings. The buildings must meet the One Planet Living principles (https://www.bioregional.com/one-planet-living), which incorporate environmental and community objectives. However, the target tenant/end user is often middle or higher income, with less than 15% often going to affordable housing. A quick video on the opportunity (of course, this is not financial advice!!! https://vimeo.com/451534223)

So my question: is this impactful enough? I can argue for positive responses to all 12 Questions of CST-informed diligence. Further, if all real estate followed these principles, the world would be a better place. However, I have not pushed for further DD among my team because I am struggling with the question, “Is it impactful enough?”

One thought on “Module 2 – Is it Impactful Enough?

  1. We find ourselves often asking the same question. We are trying to do a better job of defining what impact we want to have on what people or environmental issue and then trying to assess from there subject to our own financial constraints. So if your impact goal is to provide more affordable housing, you likely can find better opportunities than this, though perhaps at a less favorable risk-return profile? If so, consider what return you can “forgo” in order to have more affordable housing.

    I also find asking myself whether these projects would happen without us (the additionality question) a valuable one. If so, it probably is not impactful enough, at least for our “high impact” or impact-first portfolio. I did not watch the video you linked to, but presume this is probably a fairly market-rate return so there are other investors to fund this? These church properties would probably sell without this vehicle anyways?

    Also, if you do proceed, are there areas where you, as an investor, can push for more impact? higher % of affordable housing?

    No good answer, suppose impact is in the eye of the beholder!

    Like

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