Davos Perspectives on Impact Investing

Recorded during the World Economic Forum in Davos, this short episode captures a timely conversation on how investor thinking is shifting in a changing global landscape. Hosted by Camille Accolas of the Swiss non-profit GreenUp at Climate Hub Davos, the discussion features responsAbility’s Stephanie Bilo, Chief Client & Investment Solutions Officer, sharing insights from her conversations with investors on emerging markets, private capital and impact.

Guest:

Stephanie Bilo (Chief Client & Investment Solutions Officer, responsAbility)

Hosted by:

Camille Accolas (Founder, Trust Exchange / Representative, Climate Hub Davos)

Follow responsAbility on LinkedIn: https://www.linkedin.com/company/responsability-investments

https://www.responsability.com/

Transcript

As global markets shift, where should investors really be allocating capital today? Impactful venture ideas. They need to have a market. You need to deploy it somewhere, and you need to put the capital at work and scale it to Mars. And that's where actually emerging markets come into play. Welcome to Voices of Impact Investing, the responsAbility Investments podcast. This short episode was recorded during the World Economic Forum in Davos. Our thanks to Camille Accolas from the Swiss nonprofit group Greenup for hosting the conversation at Climate Hub Davos, where she spoke with responsAbility's Stephanie Bilo. Good afternoon Stephanie. My name is Camille. I'm with the Climate Hub Davos. We're here at the. It's freezing but very sunny. So we're taking advantage and decided to stand outside monkey Rock, the art exhibit out here. Um, yeah. Do you want to tell us a little bit about you and your role at responsAbility to start off this conversation? Hi. Thanks for having me. It's great to be here. Yes, in the cold, but actually we all warmed up because there's a lot of good talks happening. You know, responsAbility. We've been pioneers in impact investing for more than twenty years in emerging markets. We do investing in private markets in over seventy countries. There myself, I look after clients and and construct interesting investment solutions for them. So they want to invest into our impact investment solutions. So the World Economic Forum's topic this year is dialogue. What are some of the dialogues that you're interested in or pursuing over the course of the next few days here in Davos? Well, dialogue is obvious. That's all we do here obviously. Um, so no, look, for us, it's always been a place where we meet public and private sector, uh, you know, and we have a lot of exchange collaborations. We've always been around that year. Of course, it's around that. Of course, the backdrop nowadays is a bit different, and we feel we are at the crossroads in terms of geopolitics, but in terms of the dialogue in the impact in industry. It's always been an important place, place for collaboration. And what do you feel are the conversations that are different this year? I think with regards to the impact investing industry in emerging markets, we are at the crossroads because the world in general is shifting away from, uh, let's say US Europe developed markets and is much more open to the rest of the globe and emerging markets. Is is taking a bigger role nowadays, more interest. How can you actually profitably and sustainably invest in those in those markets? Very interesting. You mentioned profit. I feel like when it comes to emerging markets and investment in that, there's also always a topic of risk. Do you feel like what are some of the insights that you've had in the conversations you've had maybe this week or in recent months, on why it does make sense, why it is profitable? We have been exchanging quite a bit with development finance institutions, but also banks and institutional investors exactly around that topic. Of course, there's still the perception around a high level of risk in those markets. But there's more and more transparency. You know, what type of actual losses are you making in emerging markets and the databases that we have been creating that also, the Gems database is now coming with, you know, with twenty years of track record shows, actually, that the market perceives the risk much higher than it actually is. Also us, we have a very strong track record in those markets. I think that's kind of a realization. That brings us to the real story. Where is going to be growth in the future, where, you know, across the globe, two thirds of the growth will come out of emerging markets. You mentioned, you know, you're at a turning point, almost maybe a shift in your work and also in the industry that you're a part of. So what are maybe some of the kinds of questions that you feel investors who are maybe alongside you in this journey are starting to ask. I think it's become quite sophisticated in our markets for impact investing. With regard to what actual outcomes do you support? How do you measure CO2 emission savings? And actually investors are asking very specific questions to this. And of course, always from a backdrop, is this actually a profitable investment. So those remain. And do you think how do different investment classes feature in the discussion here. Um, since we've been exchanging quite a lot with the public sector and also with banks, it's been a lot around, uh, private debt investing and how to scale this up to make this an interesting asset class for institutional investors. But just as important, particularly in Davos, is the venture and the growth private equity scene here, because it's really a place where you can do a lot of ideation. You can showcase some interesting startups. And and this is something that always gets me inspired. Amazing. And so you mentioned that there's a lot of inspiration in these rooms. Do you want to maybe tie that back to what this means in your day to day work? Yeah, sure. It's it's very important to actually link the startup scene here, maybe in Switzerland or developed markets back into emerging markets. What's the link for us here? And it's actually quite often those great impactful venture ideas. They need to have a market. You need to deploy it somewhere, and you need to put the capital at work and scale it to Mars. And that's where actually emerging markets come into play. Once you have a product that sells, you can bring this to growth markets like the emerging markets. And that's where you then need again, growth financing. And that really just shows you how you can leverage more and more impact through these impact solutions coming from the startup, maybe from here and bringing this to emerging markets to really big markets and scale it up and reach a lot of people and really also save a lot of CO2 emissions, for example. Absolutely. Likewise, I think it's so interesting to see all the tools. One of them that I mean, I've heard quite a little bit about this week, for example, blended finance comes up quite often in these conversations or in these settings. How is that being viewed in the conversations you're having? Blended finance is super fascinating topic, and it is, of course, something that that responsAbility is very active in with structured more than eight different products so far. So blended finance is really something that is two our core to bring more investable solutions to clients, but it only brings us so far because it takes a lot of time to structure it. It takes a lot of capacity. And at the end of the day, even with a really scalable product, you still are just scratching the surface. You know, five hundred to a billion is not super large. Institutional clients would want to invest much more capital. How do we actually tap this without always needing to structure complicated blended finance structure? That's one of the questions we've been discussing today, for example. But of course, blended finance is is an important starting point to get actually new investors into emerging markets. Super interesting. And you mentioned, you know, these these bigger institutional investors, for example, thinking now on like private equity, is that a fit into the picture that's being discussed in Davos. Are they also around the same tables. Um it depends a bit. I think it makes sense to discuss it in different asset classes because there are different needs. But of course private equity is is the real driver of growth also in emerging markets. So I think it's a very important topic to to get also to a level of skill. How can you scale up investment in emerging markets, uh, with private equity as well. And that's something of course, where we are also very active in. Amazing. I think that's a lot of insights. Thank you so much. Maybe to wrap up our conversation, what's one message that you'd like investors or decision makers to to take away from your thoughts today. I think we're at the crossroads and there it really means it's not just the growth that will come out of emerging markets. It's also where investors should allocate more to profit from the growth. Thank you so much Stephanie. Thank you for joining me here in Climate Hub Davos. And yeah enjoy the rest of your afternoon. Thank you. Don't forget to subscribe to the Voices of Impact Investing podcast to stay updated on new episodes available on Apple Podcasts and Spotify, and follow us on LinkedIn at responsAbility investments. You'll find the link in our show notes. The Voices of Impact Investing podcast is provided by responsAbility Investments, a licensed and supervised manager of collective investment schemes. This recording and data mentioned here has not been submitted to, nor received the approval from Finma or any other regulatory body. This information was produced by responsAbility Investments, together with its partners, to the best of its knowledge and belief. 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