ARYZE spoke with Hanna Lindquist of Trine, a Swedish impact investment firm based in Gothenburg. Lindquist told us about Trine, the future of the investment industry and impact investment.
ARYZE had the opportunity to chat with Hanna Lindquist of Trine, a Swedish impact investment firm. Trine’s clients invest in loans to global solar energy companies, who place panels providing sustainable energy to local communities in developing countries around the world. Trine aims to provide a triple return on investment – financial returns, social impact, and environmental impact. Trine investors have so far made an annual return as well as ensuring that people in emerging markets can access cheaper, more sustainable and reliable electricity.
The thing we’re really passionate about is that you don’t have to choose between profit and purpose anymore. Our impact is our output, it is what you invest in, and it will become very easy to combine these things.
Since Trine exists outside of the larger financial system, their investments are not susceptible to its fluctuations. This attracts many of their investors, says Lindquist:
If things happen dramatically globally, for example a trade war or a stock market crash, the likelihood that your investments with Trine would be affected is quite small. A household in Kenya will most likely not be that affected by a trade war between Iran and the US. So if most of your savings and investments are placed in the large financial system, you are vulnerable to those macro factors. That diversification factor is something that attracts our investors.
Lindquist believes that the investment industry will play a large role in promoting environmental sustainability:
Everything that we have in the world now is caused by what we’ve actively chosen to invest in. The only reason we have such a strong fossil fuel industry is because we have poured money into that sector. The same goes with sustainability and what’s happening in the renewable energy sector: there’s been a rapid growth there because we have started to invest money in it. But it’s still, of course, too little in comparison. So I think the role of the financial industry is huge, and it’s going to be key if we’re going to change the current path we’re on. Where the money flows, that’s where development grows.
Lindquist believes it inevitable that sustainable and social investment will become the norm in the investment industry. Change is happening, as shown by the fact that the European Central Bank has committed to stop funding new projects that will increase gas, oil and coal emissions. However, she feels the shift has more to do with risk mitigation and avoiding future losses than with a desire to save the planet, especially since the Financial Times has estimated that over $900 billion of fossil fuel assets could soon become stranded. This could have huge economic repercussions if the industry does not change quickly enough. Lindquist doubts that sufficient change will happen soon enough:
We’ve known about climate change for so long but the real shift has yet to happen. With the pace we have today, it probably will not happen soon enough. We are coming to a common understanding of the scale of the issue now, but we’re not yet making the shift. Many of the big petroleum companies have started to invest in renewables and to look into transforming, because a lot of them realise that oil won’t always be lucrative. But it’s still a very limited investment compared to the total investment that they could make.
Public opinion is changing in favour of sustainable investments. However, even when people invest in sustainable funds, that does not guarantee that investments are being placed ethically. For example, Linquist discussed a recent Swedish investigation that found that so-called ‘sustainable’ investment funds had identical underlying assets to standard ones.
When asked what role shareholder advocacy may have in steering major investment firms away from fossil fuels, Lindquist believes it is important to be realistic about what power small shareholders really have:
Sometimes it’s really good to enact influence by being sure that you’re in the room – you can’t just go with signs outside and demand change. But you have to separate between when it’s real influence and when it’s just something being said and the results are lagging behind. If you’re passionate about the environment, and you want your capital to have an impact and result you can follow, it’s going to be difficult to get that from the more traditional investment firms as a small investor. Perhaps you need to look at more direct ways to invest in things that you find impactful.
In the future, Trine hopes to offer different types of impactful sectors to invest in besides solar. They will be trying to scale up in the coming years, and in the meantime, have launched an impact hub with the aims of opening a broader discussion about impact investing and how individuals can get involved. For more information about Trine, visit their website. For more interesting insights into tech and development, please visit ARYZE’s blog. To see how ARYZE is leveraging financial and tech developments to solve the SDG 9, 10 and 16, please visit our website.