Kimpa, a conversation on impact investment and why it matters

Kimpa is on a mission to drive capital into projects with high environmental and social impact. Marie Freville introduces us to impact investment and key aspects to take into consideration when assessing an investment.

Marie Freville who is French and grew up in Brazil and Spain, became passionate about nature and society through those experiences. Since then, sustainable development has been an aspiration that guided her decisions at a personal and professional level. Today she works at Kimpa, an advisory firm specialized in impact investments. Kimpa advises families, businesses and institutional investors, helping them define their theory of change and apply it through their investments.

How was Kimpa born, and with what objective?

Kimpa’s mission is to steer capital towards socially & environmentally impactful projects. The company was born from the mind of three co-founders in the middle of their professional career (Julien Lescs, Vincent Piche and Oliver Rieu) with very different and complementary experiences. A wealth manager, an expert in governance and an engineer who used to be an executive in a luxury firm. Coming from different backgrounds, they all shared a profound desire to change the status quo, to inspire others to do good, and a passion for outdoor sports.

Can you briefly explain what is the difference between responsible, sustainable, and regenerative investments in your view?

Responsible = doing negative exclusion in your investment process. Reducing your investment universe to avoid sectors that are toxic or unethical (fossil fuels, weapons, pornography, tobacco etc.) It’s the first step towards better investments and can show good intentions, although it is clearly not enough in terms of impact.

Sustainable = you start taking into account some ESG (environmental, social, governance) criteria into the investment decisions, but these are still motivated by financial profit-first. Companies mismanaging their waste or with very hierarchical, undiversified executive committees are rated worse, not intrinsically because of the damage they cause to the earth or society, but above everything because those are risks for the shareholder (eg. legislation can punish, fine, prohibit certain practices, customers can boycott etc.)

Regenerative = putting life back at the center of everything and accounting for financial profit (of course, that’s the first point of an investment which is defined as using time / capital / energy with the expectation of worthwhile results) but also social & environmental benefits. Regenerative investments are those that have the improvement of a certain condition at the core of the intention or business model.

How do you weigh and value aspects of the environmental and social impact of an investment which are not yet quantifiable? (Ecosystem value, biodiversity protection, social inclusion, etc)

A third of our due diligence process is dedicated to impact. One thing to bear in mind is that most of the investments we’ve advised are minority positions in the companies so we have little margin to impose indicators, however we are always in contact with the entrepreneurs and they tend to see that as a value add rather than an extra obligation.

We don’t have a very precise impact measurement for each startup as we are not a fund. We use the Impact Management Project as a standard, however, we adapt each direction to each case.

Additionally, we define SDGs linked to the deal, and the investment themes linked to the SDGs as well as the most suitable metrics for each case.

How do you work with clients to define the investment thesis?

Each client (family, individual, business) defines their investment thesis by first choosing 3-5 Sustainable Development Goals and then other criteria such as sector of activity, geography and maturity of the companies so it varies from a client to another. However, the majority of the investments we work on focus on tackling climate change (GHG reduction, carbon capture, adapting to new climates), agriculture, energy and education, which is a topic that interests a lot of our clients.

Several points linked to that:

- We chose the SDGs as the main framework - although like any framework it is not perfect and can always be improved - because it is easy to explain and understand, it covers many areas of environmental & social impacts, and there are tools linked to the SDGs that allow for their use as a criteria in investment decisions.

- Namely, Toniic (a network of impact investors) has defined investment themes for each of the 17 SDGs, the UN itself has defined metrics to measure their achievement, and IRIS+ has a set of almost 700 indicators to follow individual companies’ progress and contribution towards the goals.

- Since each client has a different investment thesis (eg. some want to support companies in their very first phases of development, when technologies are not there yet; others prefer more mature and stable investments etc.) it is really interesting to see how all the SDGs are interconnected. Often times, contributing to 1 has a positive impact on the 16 others. For ex. implementing circular economy for a food business with returnable / refillable packaging will impact SDG 12 but also SDG 14 (life in the oceans) thanks to plastic reduction, and potentially an impact on human health.

What would you tell investors that are reluctant to incorporate impact or sustainability aspects into their thesis?

What I would tell them is that if you don’t integrate it for the ethical aspect, do it for the profit. We now know that fossil fuels are the leading cause behind climate change. Financing them is driving the whole humanity into an unliveable world with more frequent and more intense natural disasters, emergency migration, famines etc. If we don’t change the way we invest today, it’s a risk for all of us not that far down the road (see losses from Hurricane Ian, the drought this summer in Europe). Also, legislation is becoming more demanding as time goes so you might as well get ahead.

Which industries do you believe deserve more attention?

Energy –the main roots of the problem and potentially the solution to it all. I understand energy as an industry of course, but also as a concept. The food you eat gives you energy, and you transform this energy and dedicate it to something each day. Are you steering your energy to the right place? Do you really need to eat a hamburger that has used X times more land, water, crops, energy to kill / transform the meat / transport it / package it / put it in a supermarket etc. when it can give you the same energy (in Joules) than chickpeas produced locally ?

Linked to that, agriculture, also very tied to energy but beyond that has also a strong social aspect (X% of the food we eat comes from smallholder farmers, usually not living on decent wages). The health of our soils, the biodiversity on earth, our own health (nutrition): so much depends on agriculture yet it has been the “forgotten” sector of the past decades.

What has been your greatest satisfaction?

Knowing that I am contributing to the financing and the growth of several startups, each of which is doing its best to change the customs of its industries. Working with young people that are inspirational and optimistic about our future.