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Blackstone launched an impact investing platform this week, signaling that major investors are becoming more active and seeing competitive returns in the social impact sector.
The platform will focus on health and well-being, financial access, sustainable communities and green technologies, the company said in a statement on Monday.
The Blackstone impact investment platform will be a part of the firm’s Strategic Partners group, which has $28 billion in assets under management.
“As a firm, we seek to deliver value for our investors while also having a positive impact on the communities in which we operate,” said Jon Gray, Blackstone president and COO, adding that the impact platform is a natural extension of their business.
Devin D. Thorpe, author of Adding Profit by Adding Purpose: The Corporate Social Responsibility Handbook, told Karma Network that the move was a positive sign for the sector and a signal that industry players are attracted to returns as much as the social impact of the platform.
“If we don’t focus on the financial returns, social impact enterprises will never attract enough capital,” he noted. “I’d be shocked if Blackstone is not financial-return focused.”
While some analysts think impact investing would yield lower-than-market rate returns, because it focuses more on social goods than monetary gains, others note that impact investing essentially mitigates risks by actively addressing systemic problems and therefore would have a higher return than a market rate.
Thorpe pointed out that there are vast amounts of opportunities in investing for social good while having a reasonable return. One example is investing in public transit, which helps reduce carbon dioxide emissions drastically and has a similar return track record as portfolios with the same level of risks.
Tanya Barnes will be heading the initiative, Blackstone announced. After working at Goldman Sachs as managing director for 15 years, the Harvard-educated executive served as principal for Reverence Capital Partners, a New York private equity firm, for two years before joining Blackstone as the managing director for its impact investing platform, according to her Bloomberg profile.
Barnes said she would leverage Blackstone’s expertise and scale to expand the role of private capital “to create solutions that address the world’s most pressing social and environmental challenges.”