Can “Impact Investing” Help Save the Planet?

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Today we’re going to talk about another approach that’s gaining steam: impact investing. Impact investing is all about making investments with the goal of advancing social or environmental outcomes – not about maximizing financial returns. Joining Nature Breaking today to explain how it works is Isabelle Foster, WWF’s Senior Impact Investing Specialist. Isabelle is part of WWF Impact, our impact investing venture. And she’s also a podcast host, having recently launched a limited-series show called Catalyzing Climate Conversations. Her new show is a partnership with the Aspen Institute’s Aspen Network of Development Entrepreneurs (ANDE).

Stay tuned to hear from Isabelle about how impact investing works, why WWF is investing in companies like EatCloud—whose software platform is helping grocery stores and other businesses divert food from the landfill and instead support local communities—and how these investments advance conservation outcomes on the ground.

Links for More Info:

Isabelle Foster bio

WWF Impact

PODCAST: Catalyzing Climate Conversations

TRANSCRIPT:

Seth Larson: Welcome to Nature Breaking, a podcast produced by World Wildlife Fund. I'm Seth Larson. We've talked before on this show about the critical role that financing plays in achieving conservation goals.

Simply put, saving an ecosystem or a species isn't free. Those efforts require lots of scientific research and analysis, tools, infrastructure and staff. WWF has been at the forefront of a variety of innovative ways to finance those efforts, from project finance for permanence initiatives to debt for nature swaps, and more.

Today we're going to talk about another approach that's gaining steam: impact investing.

Impact investing is all about making investments with the goal of advancing social or environmental outcomes, not about maximizing financial returns.

Joining me today to talk about how it works is Isabelle Foster, WWF's Senior Impact Investing Specialist. Isabelle is part of WWF Impact, which is our impact investing venture. And Isabelle's also a podcast host, having recently launched a limited series show called Catalyzing Climate Conversations. Her new show is a partnership with the Aspen Institute's Aspen Network of Development Entrepreneurs.

So before we begin, please go ahead and subscribe to Catalyzing Climate Conversations on your podcast app of choice. And now let's hear from Isabelle about how impact investing can make a difference for nature and what angles she'll be highlighting in her new podcast series.

All right. Isabelle Foster, welcome to Nature Breaking. It's so great to have you here.

Isabelle Foster: Thank you so much, Seth. Really excited to be on the show today.

Seth Larson: Yeah, I'm really excited for this conversation. Awesome to have a fellow podcaster in the room. I think this is the first time we've had a bit of a crossover episode like this, so this is really exciting. Isabelle, I want to start off by asking you to start with the basics and just explain what is impact investing? What sets it apart from what people might think of as traditional investing?

Isabelle Foster: Yeah. Great question and again, Seth, thank you so much for having us. It's really exciting to be on Nature Breaking and excited to dive more into impact investing, which is a new space that's really grown over the past 10 to 15 years. I think to your question, how does, how is this differentiated from traditional philanthropy, mainstream market investing? And you can think of it like a spectrum. So philanthropy, you're typically giving grants, philanthropic capital with no expectation of return.

Seth Larson: Yeah.

Isabelle Foster: But really prioritizing impact, that's kind of the main goal. On the other end, you have mainstream market, private investors, who historically have only been focused on maximizing financial returns, right? So they're investing with this eye towards profit. And I would say impact investing has grown as this exciting new space where you're really making investments in supporting private companies, but doing so with an eye towards impact. So your investment has the goal of furthering impact rather than maximizing financial return.

Seth Larson: Yeah, it seems like such a really cool and exciting way to get the best of both sides of that spectrum and pool them together to make some big differences for causes we care about. I know from going back and forth with you over email before we talked today, that there are some different, there are some different styles of impact investing, maybe for lack of a better term. Can you just break down some of the different approaches to impact investing and how they are differentiated?

Isabelle Foster: Absolutely, and I think to this point of the fields growing, you're starting to see different flavors and types of impact investing emerge, which is really exciting. So analogous to finance where you have different asset classes and different ways of investing from venture style, venture capital style investment where you're supporting early-stage companies and startups all the way to private equity where you're investing into larger companies. You have that parallel as well with impact investing, which is really cool. So you have impact investors who might be doing work on the early-stage side investing into impact first companies that are new, growing, scaling, have a new innovation such as alternative to plastics. So the very new, just coming out of the lab, really trying to accelerate and grow. All the way to more private equity style investments where you might have an investor who's coming in investing into a farm that's trying to transform that to be more regenerative and have impact in that way.

So really a spectrum of like asset classes and then, within that, you also have the ability to tailor the financial instrument you're using, and you can customize that per company to better suit what will be needed for the company, their financing needs and their growth potential. So it could be anything from equity to debt, revenue-based financing, convertible note, there's a variety of different instruments you can use. So not to go too far into the details. But there's many instruments and different stages that you can invest in, which is really exciting.

Seth Larson: Yeah, and so we should talk a little bit about why WWF... why are we here on a WWF podcast talking about impact investing?

So WWF actually got involved in impact investing a handful of years ago, and I'd love for you to explain to our audience, why is WWF embracing this approach and how have we viewed it as advancing our conservation mission?

Isabelle Foster: Excellent question. I think this gets really to the heart of WWF and what we do. So as many listeners know, we're focused on conservation and biodiversity across a variety of different landscapes, geographies, areas like oceans, forest, wildlife. And we do that in a variety of ways from policy, community engagement on the ground, working in landscapes. And finance is this new tool, or a tool we've used in many different ways in the past. But increasingly we're excited to see how can we leverage finance? Particularly private capital, to drive change in conservation. And so I think impacting investing is a really cool opportunity where we can make investments with the goal of driving impact and really accelerate a lot of our work as a conservation organization. So whether we have a portfolio or area where we're investing to support innovations in the food system or aquaculture and seaweed, we're really able to drive change and accelerate our conservation goals through these early-stage companies.

Seth Larson: Yeah, so it feels like we're at a moment in conservation and the global environmental movement where a lot of the progress that's been driven over the last half century or so was primarily funded by public budgets, governments putting money towards projects or initiatives. Or philanthropy, that one side of the spectrum that you already spoke to. And I think we're... my sense as, kind of, not an outsider, I work for WWF, but not an expert in this field. My sense is that we're seeing the limits of where those public budgets and philanthropic dollars can get us. They've done a lot, but the crises of nature loss and climate change are just so big that we need as many financial tools as we can find to raise the money that we need to keep nature intact and to fight against the worst impacts of climate change and on and on.

And so these tools like impact investing are more and more coming into play and people are just getting really creative about how do we raise the money we need to save the Amazon rainforest, or whatever it might be. And so that's really exciting and I want to ask you to talk about some more specifics in terms of how WWF is deploying these approaches. And I know WWF Impact, our impact venture that you can speak a little more to in a minute, has decided to focus on three areas that you just alluded to a little bit, but it's regenerative agriculture, food circularity, and aquaculture, basically seaweed farming, oyster farming, et cetera. Why those three areas and what kinds of investments are we making in those areas?

Isabelle Foster: Yeah. And just to quickly circle back to a point you made Seth, which I think is really important is for the reason why we're doing impact investing, trying to bring in more private capital.

Yeah. A lot of the capital in the global system is private and public budgets are tight, increasingly getting tighter. And so I think that piece that you mentioned, unlocking private capital is a really strong reason. And to segue into your other point too, I think another key piece is, impact investing particularly at the early stage, can really help support local solutions.

And so I think this is one thing that's really exciting, from our perspective, is that local entrepreneurs... they best know and are living in and working in their ecosystems, their communities, they're most closely touching on a day-to-day basis both the environmental and social challenges as well as the solutions.

And so I think just want to highlight that as another reason why impact investing is so exciting, is because you can really support local kind of ground up solutions.

Seth Larson: Yeah. And I think, correct me if I'm wrong, but I think one of the reasons that impact investing is so critical to advancing those local solutions is that, those are the type of solutions that might not be attractive for a more traditional investor to put money into because they're at the early stage. They, I don't know a lot about investing at all but I've, I'm familiar with this term of the Valley of Death that a lot of startups can't get across because there's just not enough investment available to them to get their product to a point where it becomes ready for the market in a big way. So impact investing can play a really critical role in finding those opportunities, putting money in where others might not want to, or feel ready to, and get these companies that are doing cool things or, farmers or whatever, to a point where they can operate more sustainably.

Isabelle Foster: Exactly. I think that's a really key piece, and particularly for WWF as a nonprofit entering this space, we can bring really patient capital.

Whereas most mainstream market investors prioritizing profit are not necessarily going to have the time horizons or the impact focus that we have when we make our investments. And I think that segues nicely to your question, Seth, on why food systems for our starting point? So obviously WWF, we work in a variety of different areas, landscapes, sectors. And I think agriculture and food systems is a really cool nexus point that is almost a confluence of the different types of work that we're doing. On the one hand, agriculture is a significant driver of environmental degradation. About 80% of deforestation is attributable to agriculture, 70% of freshwater use, it's for agriculture. And food systems are responsible for about 30% of GHG emissions, greenhouse gas emissions, according to the WWF's Living Planet Report. But at the same time, you also see tremendous opportunity. We can't survive without the food system. About 3.83, billion people worldwide rely on agriculture as their primary livelihoods, according to FAO. So we need it for food, nutrition, income, but at the same time, it's a strong driver of degradation and biodiversity loss. I think WWF really wanted to start here to say how do we support some of these business models and really innovative solutions, bubbling up from the ground up from local entrepreneurs that can address some of these challenges. And I think to this point you're making before Seth, on the need for patient capital and the time horizons that we as WWF can uniquely make these investments and have long time horizons, that's fundamental to agriculture. Agriculture is not an industry that's inherently very profitable. It's normally very, like hardware intensive. You need a lot of equipment.

Seth Larson: Yeah.

Isabelle Foster: The transition to regenerative agriculture is hard. It's long, costly. You don't have a lot of traditional VC funds saying, we want to invest in agriculture 'cause we think we're going to get Facebook-like returns. So you have this capital gap.

But at the same time, these companies are so fundamental to life for everyone. And so we found that this was just a great nexus point where we could bring our unique capital base to address a challenge that's very intersectional across WWF from thinking about fresh water, from forestry and agroforestry, land use, soil health, climate, GHG emissions, food loss and waste, so intersectional. So we really wanted to start here and try to build our work on this space.

Seth Larson: It makes all the sense in the world. It is the common thread that binds so much of our mission together, and what we as humans rely on in the world. It's just, it all comes down to food. And where's our next meal going to come from? How am I going to make a living, providing food to my community, et cetera. So WWF Impact has done some really cool things in this space so far. I've gotten a chance to learn about a number of them over the last couple of years, from working here.

Isabelle Foster: I'd love for you to share a little with our audience about one or two examples of the type of companies we're working with and the type of solutions that we're helping to advance through these investments. Yeah, this is a great question. I think all impact investors are super jazzed and excited to talk about the investments, 'cause that's really the tangible example of why this work matters and how we can further impact through catalytic impact-first finance. And so one company that I want to highlight is in our food circularity portfolio.

So our first investment in our food circularity portfolio is a company called EatCloud. Phenomenal team based in Colombia. So they're born and raised the company out of Colombia. They're expanding now to Mexico and increasingly other geographies across Latin America and globally. They're trying to tackle the pernicious problem of food waste adjacent to the very tragic challenge and problem of hunger and food insecurity.

Yeah, and oftentimes it's just so heartbreaking to see the surpluses that get thrown away, which further GHG emissions, greenhouse gas emissions, environmental degradation. And at the same time, you have such hunger and need in local communities globally. So EatCloud really set out to address this and they've developed a software platform that grocery retail stores, point of sale food... food retailers, restaurants can use to help them manage their inventory. And basically, when there's surplus food, for example, if a grocery store has milk that's going bad in two days, they can't sell it on their shelves due to corporate regulation. But you can still use it, it's perfectly safe the next two days. These grocery stores using EatCloud's solution can actually post that on their platform, and it gets matched with local community organizations, food banks, and is instead redistributed to communities, to be able to eat it. So it's a really compelling example. Just to highlight some of the impact EatCloud has had, in the past four to five years of their existence, they've donated over 115 million meals of food to local communities.

Seth Larson: Whoa.

Isabelle Foster: Which is the equivalent of 50 million kilograms of food, which would've ended up in the landfill generating greenhouse gas emissions, climate degradation, a lot of challenges there. And at the same time have saved $12 million of food.

Seth Larson: Wow.

Isabelle Foster: So really tremendous, compelling case both on the environmental social side, but also for industry. And I think when we as WWF are investing, we're really looking at our theory of change. Why are we making this investment?

And I think EatCloud encapsulates a lot of this from the policy alignment piece. So one thing I want to mention that's really important about EatCloud's work is that they align and really help support the implementation of some very progressive policy in Colombia, for example. Hmm. So Colombia has been leading the charge on a lot of different policy around environmental and preventing climate change. But specifically with food waste too. There's a 2024 legislation, Law 2380, which actually has really favorable tax incentives for corporates and companies to donate food.

Seth Larson: Okay.

Isabelle Foster: So essentially if a corporate's donating food, they fill out the paperwork to the government, the company actually gets a tax deduction.

So it's this positive pull, this a positive incentive to help companies make the donation. However, oftentimes there's a lot steps, it can be difficult to get all the paperwork and the verification and so EatCloud has actually integrated that into their platform.

Seth Larson: Oh, wow.

Isabelle Foster: So they're automatically generating all the paperwork, the verification, to make it really easy for companies to submit that. So in doing so, they're helping support the policy legislation, making it easier for companies and corporates to access that benefit. And also data. They're gathering a lot of really important data on food waste.

This is something that our food loss and waste team is really excited about and shows the programmatic linkages here on this investment is that you oftentimes need the data and if you don't have the data of how much food's being wasted, how are you going to manage that?

Seth Larson: Yep.

Isabelle Foster: Huge problem. And so I think EatCloud's done a really great job in building these analytic dashboards for the companies that they're working with.

So one example, they're working with Exeto, which is the largest supermarket in Colombia. They have over 500, 600 stores across the country that are using EatCloud's solution. And so EatCloud can actually match for  Exeto, where do they have the most waste? What are the types of food that are being wasted? When during the week is this happening?

So the companies have actually been able to change their supply chains, change their inventory, and reduce the amount of food that's being wasted from the get-go. So I think, again, this aligns with our programmatic focus within WWF on measuring food waste for prevention and then also trying to focus on these upstream solutions on preventing waste from occurring.

Seth Larson: Yeah.

Isabelle Foster: And then if you do have waste, donating to the highest use, which is donating to communities.

Seth Larson: Yep.

Isabelle Foster: So really cool example that we've been super excited to see grow over the past few years since our investment and really hitting on those both environmental and social impacts.

Seth Larson: I absolutely love this solution and this idea.

We, I've interviewed folks from our food loss and waste team on the show before and they talk about the, this crisis of food waste and how much food goes to waste on an annual basis in the US and globally. And you just sit here and think of God, this, there must be a better way to prevent this.

I think a lot of people when they hear about food waste, think about "did I finish everything on my plate at dinner?" And maybe I'm going to feel a little bit bad about throwing away, like the scraps of pasta that I didn't finish. But so much food loss and waste happens at the farm level, at the grocery store level, and at restaurants and lots of other settings.

But having systems like this that can give those places a way to redirect food that they know they're not going to be able to sell and give it a second life, really seems like it could make some headway. You mentioned that they're expanding into Mexico. Is there a plan for them to expand into other countries, maybe more globally and have it available for folks here in the US someday?

Isabelle Foster: Yeah. No, it's a great question. I think it's really exciting to see the traction EatCloud's had. As you mentioned Mexico's a new market opportunity for them, growing and scaling there. Ecuador is another country. So they've been focused on Latin America, increasingly doing some work in Spain. So I think one of the really smart approaches of EatCloud is that they're also trying to go where policy is supportive of this.

Seth Larson: Interesting. Yeah.

Isabelle Foster: And so as we have more countries, France is an example, Spain's an example... really have progressive legislation like Colombia around organic waste bans as an example, these incentives to donate food. You need solutions for implementing that. So EatCloud sees both this kind of market opportunity, impact opportunity.

And so Spain's an example of this where they've had progressive legislation. There's an opportunity there. EatCloud actually has been really plugged into a lot of different outlets to try to build this ecosystem at large. So really exciting news is they just got selected for Rockefeller's Bellagio residency. So Jorge Correa, the CEO and founder will be spending a month in Bellagio to brainstorm with other leaders around how do we address food waste.

Seth Larson: Wow.

Isabelle Foster: How do we support meals served around the world and reduce hunger? So I think it really is just a testament to the incredible work they're doing in this global scale that they're trying to have for replicating this, but being part of a solution that goes beyond just one company.

Seth Larson: Yeah. I love hearing that and I love that WWF is supporting the work they're doing. It's so cool. Isabelle, I want to give you a chance to plug some of the other work you're doing because as I mentioned earlier, you recently launched a podcast yourself. The podcast is called Catalyzing Climate Conversations, and it's something that you're doing in partnership with the Aspen Network of Development Entrepreneurs, or ANDE for short  .

And I wanted to just give you a chance to talk about why you wanted to start this podcast and what topics you're going to be covering and what you're hoping your listeners are going to take away from the show you're putting together?

Isabelle Foster: Yeah, no, and first I need to start by saying thank you, Seth. I think you and team have been so pivotal in sharing lessons learned and insights from Nature Breaking and we've always looked at that as kind of inspiration and a role model for our podcast.

Seth Larson: Oh, thank you.

Isabelle Foster: But, it's been really fun to build this podcast with as you mentioned, ANDE, which is the Aspen Network of Development Entrepreneurs, and this was born out of idea a couple years ago on how do we focus on and really elevate examples, successful examples of climate innovation, climate impact investing, climate entrepreneurship globally. And one of the goals of this show is we're hoping we can spread some climate optimism.

Seth Larson: Yeah.

Isabelle Foster: 'Cause as you mentioned in the start of the show, Seth, there's a lot of climate crises happening at an increasing rate ever present in the news. A lot of challenges we're facing globally, but at the same time, there's these glimmers of light and inspiration and lessons learned from folks all around the world. Organizations really pioneering solutions and different geographies from Asia to Africa to island nations. And I think hearing those stories is both compelling to give optimism for everyone, but also there's so many lessons we can learn that are translatable across different initiatives and different geographies. And so we really wanted to highlight this particularly in markets that haven't gotten as much coverage. So I think oftentimes there's a lot of podcasts that might be talking about climate tech, clean tech in Silicon Valley.

Seth Larson: Yeah.

Isabelle Foster: Or Europe or the US. All of these are incredibly important solutions, but there's also, at the same time really compelling examples of things happening in Asia, in Africa, around the world, in Latin America. So we wanted to highlight those innovators and entrepreneurs and different thought leaders and try to share their work and bring this into the global discussion of how do we connect all of these thought leaders and facilitate both awareness of what's happening, but also more connectivity, more cross geography, cross sector collaboration in the climate sustainability space so...

Seth Larson: Yeah.

Isabelle Foster: It's been a really fun process. Working with ANDE has been phenomenal. And really tapping into their network as well and thinking about how do we just spotlight and bring these different communities together.

Seth Larson: Yeah, it's great. I love the show. I think it's filling a great gap in the content field, that as you just said, hasn't really been given as much attention as some of the other areas. I also think it's a great... I’ve listened to the just was listening to the first episode earlier today, and it's a great, I think, inspiration for people who might be interested in getting involved in this kind of work to just hear from these entrepreneurs who have had some success, but who have also gone through all sorts of ups and downs in their careers and had these really interesting journeys... to hear from those folks and to learn from them. And think about how you can apply that to your own journey if this is a type of work that you're trying to get into. So I think it's a great source of inspiration for people who just want to get involved and find their way into the impact investing field.

Before I let you go, I wanted to ask if you can give us a little bit of a preview of what's to come for the show, because I think when this episode comes out, there will be a couple episodes out that... I encourage everyone to go subscribe to the show. I'm subscribed on PocketCasts, it was super easy to find there, but on whatever podcast app folks use, go and find it there. Catalyzing Climate Conversations. What do you have in store for future episodes and what should we be excited about?

Isabelle Foster: Yeah. Thank you so much Seth for teeing this up and I think, as I mentioned, we're really excited about covering a variety of different geographies.

So our first couple episodes are focused in Latin America, really covering the breadth of work that's just grown in terms of investment and climate innovations, really within the past five years in particular. But excited for the pipeline. We just recorded our third episode yesterday.

Seth Larson: Great.

Isabelle Foster: Focused on South Asia, so getting a new perspective, talking with the phenomenal organization leading Dhali Climate Week, for example. Getting some insights on what's in the pipeline there, what's happening in India and beyond, getting a flavor for that market. And then also have another episode coming up about Africa and we'll be interviewing one of the first kind of venture capital impact investing funds and really hearing some insights on how they've been able to build not only the invest impact investing ecosystem, but also market for climate innovations in this kind of two-pronged approach that they've taken. Excited to share with listeners more of the different learnings from across variety of different geographies and some of the insights. One of our favorite parts of the show is we always close by asking guests what gets you excited about the next five to 10 years?

And so I think there's some really great gems that our interviewees have shared and excited for listeners to hear about that as well.

Seth Larson: Great. I can't wait to listen to it myself. Congrats on the podcast. It's really wonderful and thank you so much for being here today to tell us about not only the podcast, but also to give us an education on impact investing and help us understand why it's so important to the work we're doing.

Isabelle Foster: Yeah, no, thank you so much Seth. Really appreciate this time. Appreciate your mentorship and guidance too on the podcast as well. And really excited to be here with you and talk about impact investing. So thank you so much.

Seth Larson: Absolutely.

Thanks again to Isabelle for joining Nature Breaking today. I loved learning about the ways that impact investing can pave the way for exciting new ideas to deliver big results for nature.

This is still a relatively new space, and I'm sure we'll have a lot more stories to tell in the years to come about how this type of investing is advancing conservation efforts. For now, I hope you enjoyed learning about what Isabelle and her team are doing and why WWF is leaning into impact investing. Thank you for listening, and together let's keep building a more sustainable future.