Via varied asset classes and capital deployments, our portfolio generate a variety of returns that cumulatively fulfill the financial and social value creation potential of our capital base.
Sustainable and Responsible Investing
Sustainable and Responsible Investing has come a long way in past decades, building upon its initial practice of screening out undesirable investments to today’s practices of integrating environmental, social and governance considerations into an overall assessment of not only risk, but opportunities.
Sustainable and Responsible Investing not only avoids investments which negatively impact the environment and society, but also actively allocates capital to those companies that are most advanced in using resources efficiently and creating a more sustainable economy. In addition, RS Group works with investment managers that actively engage with their investees on these matters. Capital allocation and active ownership are both important aspects of mobilizing all assets for positive, blended value creation.
Impact Investing
We invest in projects and mission-driven companies in which positive social and environmental value creation is fundamental to their business models.
Over recent years, impact investing has become an increasingly popular practice. Within this approach to asset management, investors may view impact investing both as an asset class to which specific investment allocations are made and as a strategic lens through which all asset classes are assessed for impact opportunities.
RS Group views impact investing to advance sustainability in our world as central to how we approach the management of our portfolio. We seek to achieve impact through each of our investments and over time hope to attain real impact through working with our investment partners to advance more sustainable corporate and community practices in our world.
For more information on impact investing please see the publications pages of the following organizations:
Blended Value – www.blendedvalue.org
GIIN – www.thegiin.org/cgi-bin/iowa/home/index.html
NESTA – www.nesta.org.uk/home1
Philanthropy
We support organizations and initiatives that aim to be a force in making our world more sustainable and just.
We recognize that there are areas where philanthropy works better than investments. We provide grants and matching funding to support those initiatives that are catalytic in nature and which will create systemic changes in our society.
Currently, a significant portion of our grants are made to organizations that are working in Hong Kong and China. In Hong Kong our support tends to focus on building the related fields of social entrepreneurship and impact investing. Recognizing that China is very complex, we are still working on our philanthropy strategy, looking at how we can add value to the conversation around sustainable development and the role rule of law can play in improving equity in the society.
With our aim to create a paradigm shift in where our society places its value and priorities, we favor initiatives that increase and deepen the discussion on sustainability and we support organizations that are building the field.
Gross National Happiness in Bhutan
RS Group is exploring the idea of creating a sub-portfolio with a focus on sustainable development in Bhutan – the idea grew out of a philanthropic investment that we made in 2010 to the World Food Program in Bhutan, to support not only an important feeding program in a country where 40% of school age children are officially “stunted” due to underfeeding and malnutrition, but also to underwrite part of the transition of that program from U.N. organizational control to Bhutanese control and management.
Building upon this initial philanthropic investment, we are now considering executing an impact investment strategy within Bhutan. Such a strategy would allow RS Group to manage an integrated portfolio of capital investments, ranging from strategic philanthropy to near/below market debt and commercial market investments. The performance of this portfolio would then be assessed on the basis of a holistic set of metrics that integrates financial with extra-financial analysis.
Our intent is to develop an integrated portfolio performance framework that seeks to assess returns not only on a financial basis, but on the basis of Gross National Happiness. Such an approach would then be shared with other impact investors working to develop the field of impact investing and capital management, and help address one of the most challenging aspects of impact investing – tracking and understanding the relative value of both financial and extra-financial performance.
The Well-being Index
The idea of a “Well-being Index in Asian Cities” was conceived in 2011 by Civic Exchange, an independent Hong Kong-based public policy think tank. This project was initiated in response to the rapid economic development of Asian societies that frequently do not allow citizens to have the opportunity to reflect on the quality of their development and its impact on the wellbeing of themselves and their communities.
The Index aims to investigate citizens’ attitudes with regard to a number of well-being related “domains” (such as Health, Education, Environment, and Rights) via a public opinion survey. The ultimate goal of the Index is to generate discussion in Asian cities about what “well-being” means to their citizens from an Asian point of view, with an objective of directing the conversation away from a GDP focused approach and allow citizens and policy makers to take stock of their city’s development pathway and long-term sustainability, and explore new ways of defining growth and well-being on a personal and societal level.
Civic Exchange was established in 2000 and its mission is to:
Promote civic education amongst the public and to provide objective and balanced information to the public concerning economic, social and environmental issues Undertake research on development of economic, social and political policies and practices to help shape the breadth and depth of public policy debate on these issues RS Group was first approached to support the feasibility study of creating such an Index, and subsequently also agreed to fund the second phase of the project, whereby a framework for the index and the public opinion survey will be created via a collaborative process with partner organizations in selected Asian cities. The next phase of the project will be the implementation of the survey and the subsequent outreach using the findings.
Here are some examples of how we are taking a total portfolio approach, leveraging the impact of our philanthropic efforts and our investment portfolio.
SJF Ventures III
As part of its impact and sustainable investment portfolio, RS Group has committed capital to the SJF Ventures III private equity fund which focuses on the resource efficiency, sustainability and technology-enhanced services sectors in the US. Representative investment areas include resource efficiency and infrastructure, asset recovery including reuse and recycling, sustainable agriculture and food safety, health and wellness technology, education technology and digital media and marketing services.
SJF Ventures III is the first fund registered under the small business investment company (“SBIC”) scheme aimed at providing vital capital to small businesses nationwide resulting in economic growth and job creation. SJF Ventures is allied with the SJF Institute and Investors’ Circle, which foster early-stage impact investment and entrepreneurship nationwide. http://www.sjfventures.com
Land Rights in China
RS Group has been supporting Landesa, an award-winning global non-profit organization that partners with governments and others in India, China and Africa to help provide secure land rights to poor rural families and women, for whom land is often their only source of livelihood. Among other things, Landesa works with governments, local communities and investors to protect those rights in the face of ever-increasing demand for agricultural land in the developing world. While land-based investments present an opportunity for economic development, they can lead to a loss of access and rights to land, water and other natural resources for local communities, especially women. Beyond our grant support to Landesa, we are exploring how we can integrate the mission of securing land rights for the poor and sustainable development in our investment portfolio. We firmly believe that companies should integrate land rights security into their business practices in order to increase farmer productivity, mitigate business risks and facilitate a social license to operate. This integration would usually involve (at a minimum) a land rights situational assessment, risk assessment regarding adverse impacts to rights holders and related business impacts to the investor, determination of mitigating measures and a simple monitoring and evaluation scheme. Land rights that are unclear, weak and poorly governed are a danger for companies investing directly or indirectly in land. Respecting land rights is essential to effective risk management and long term financial success.