Rockefeller, MacArthur team up on new impact investment management platform

Leading foundations work together on impact investment

The $7bn MacArthur Foundation has committed $150m to help address financing gaps in impact investing as part of its Catalytic Capital Consortium (C3), a new collaboration with the Rockefeller Foundation and Omidyar Network.

The impact investment consortium, which was unveiled yesterday during the Global Impact Investing Network’s annual Investors’ Council meeting, will see MacArthur’s allocation provide matching investments to promising financial vehicles that are “not fit for conventional investment” with an aim of mobilising new capital to meet the UN Sustainable Development Goals (SDGs).

The consortium’s funds will be managed by the new Rockefeller Foundation Impact Investment Management (RF IIM) platform.

The first investment on the RF IIM platform and for the consortium is a $60m commitment – with Rockefeller matching MacArthur’s $30m – aimed at scaling The Rockefeller Foundation’s Zero Gap finance portfolio – an initiative that aims to use philanthropic risk capital to close the gap between global development funding needs and the resources. Launched in 2015, Zero Gap now includes nearly 50 financial instruments in 28 countries.

The Rockefeller Foundation has already closed two transactions under the Zero Gap Investment partnership on the IIM platform: a $4m investment alongside other investors in Sixup, a firm offering loans to low-income students, and a $1m investment and £950,000 grant to the Blue Forest Conservation, which works to prevent wildfires with its Forest Resilience Bond. Rockefeller said on its website that IIM has a “healthy pipeline of transactions in process”.MacArthur has invited proposals from impact investment efforts across emerging and developed markets to apply for its matching capital commitments, and is expected to provide investments to around five funds or intermediaries advancing the SDGs in areas including sustainable agriculture, inclusive entrepreneurship, education, reproductive health, energy access, and refugee finance. It is expected to announce specific investments later this year.

According to the consortium, the SDGs are facing an annual financing gap of up to $7trn, and catalytic capital can “help meet the demand for more capital across the risk-return spectrum, complement and pave the way for conventional investment, and mobilize additional capital through a range of blended finance solutions”.

The launch of the consortium comes as Swiss insurance group Zurich has unveiled a framework for measuring the environmental and social benefits of the majority of its impact investment portfolio – comprising green, social and sustainability bonds, as well as commitments to six private equity funds.

Zurich believes that the approach, developed with BlackRock, is the first framework of its kind to measure CO2-equivalent emissions avoided and the number of people who benefited from its investments and aggregate these two metrics across asset classes and investment instruments.

A pilot study of the majority of Zurich’s impact investments revealed that it helped to avoid 3.4m tons of CO2-equivalent emissions and, separately, improved the lives of 2.4m people annually, as of December 2018.