Environmental Care, Social Responsibility, and Good Governance (ESG) investing, evaluates not just the financial returns from a certain economic opportunity but its environmental and social impact. The Ahupua`a Project uses this term to include impact and other forms of socially responsible investment.
All types of asset owners, from high-net-worth individuals to large pension plans, care about ESG. Because public pension funds invest based on a long-term time horizon, they are increasingly considering ESG factors when they make investment decisions. Hawaii’s Retirement System (ERS) recently adopted ESG principles.
As Harvard Business Review recently reported, ESG is becoming mainstream in part because Investors recognize that a vast transformation in the world economy needs to take place over the next decade because the impacts of climate change are demonstrating that the planet is too big to fail.
There is a perceived lack of ESG investment opportunities in small communities like Maui. Yet the county and the state’s isolated island geography, abundant renewable energy resources and high costs for imported fossil fuels make it an ideal location for the effective deployment of capital and the efficient measurement of impact.
By engaging with community members who understand the community’s and the investors’ ecosystems, and by agreeing to a transparent 3rd party auditing system, asset owners and managers who are seeking to achieve positive social, environmental, and sustainable impacts, can make positive and profitable community-based ESG investments.
By developing the ecosystem necessary for attracting investment in cultural, environmental, and social infrastructure projects that serve as global models, the local community will benefit from capital that is put to work in ways that are truly and measurably beneficial in the long-term, and Maui and Hawaii can become a center for sustainable ESG investment.
Even when institutional investors take ESG factors into consideration, they often do not have the tools and information necessary for productive on-the-ground engagement nor do they have the capacity to build working relationships locally. A transparent and clearly articulated engagement and standards enforcement framework will address tendencies for green washing and provide a safe haven for investors. Such a framework provides the capacity to address potential negative impacts on the community – as well as corollary losses for investors – before an investment is finalized.
The Ahupua`a Investment Project is taking the first steps toward developing sustainable and replicable models for 3rd-party grassroots auditing. By gathering, reviewing, evaluating, and publicizing up-to-date data on crucial issues ranging from climate change, renewable energy, food security, and water resources to affordable housing, tourism, and good jobs for residents, we can begin creating an Ahupua`a/Beneficial Community Investment (ABCI) audit that lawmakers, community advocates, and asset owners/managers can reliably refer to when evaluating impact.
A key objective of the Ahupua`a Investment Project is to create a robust pipeline of deal flow by building the necessary ecosystem through ESG integration, including a 3rd party audit that stakeholders and investors can rely on. This ecosystem will support the identification of fundable and sustainable investment opportunities.
Funding of the Ahupua`a Investment Project is used to support building the ecosystem, including community education, investor outreach, and articulation of fundable projects. These activities are currently taking place, and were showcased at the Ahupua`a Investment Summit. Maui United Way is the project’s fiscal agent. Videos of Summit panels are posted here.