Impact Investing: How Can Investors Ensure They Can Make a Difference, and a Return?

[Music] hello everyone it's great to be here and we are here to talk about what might be one of the hottest topics of the moment uh and that is really financing the sustainability Revolution that uh 70,000 people are descending upon this country as we speak to uh to puzzle over to think about to debate over the next two weeks and we're very lucky to have someone who's been thinking about this and putting his uh money where his mouth is for quite some time now uh Prince salet so thank you for joining us um I know you've uh thought a lot about uh the nature of uh impact investing about looking at um different kinds of returns not simply looking at Financial returns which of course are uh essential but also thinking about other kinds of returns when you make your Investments you're early into biotech uh you were early into thinking about climate Tech investing um can you give us a a snapshot um as somebody who is experienced with both risk as well as thinking about multiple kinds of reward what is the moment in which we find ourselves we're setting the table in a way for the cop dialogues that are coming um and finance is a very important and contentious thread for that event how do you snap give a snapshot of the opportunity as well as really the the challenge that we have at the moment alhamdulillah your highness distinguished guests thank you very much for having me it's an absolute pleasure being here representing my country in noal finance week um so I love your question so one of the most important things that we found out at KBW Ventures since we've investing in this um in the sustainability aspect and about eight or nine years ago it really depends on uh the entrepreneur that we're investing in the sector we're investing in and really not handcuffing ourselves in a specific sector so we are really a sector agnostic and uh what we've seen is that food Tech has really been overlooked when it comes to climate change and and um and especially for our region food security we can't talk about food sustainability without talking about food security and I think uh during the um the last uh well the uh the two years that we uh we suffered through the covid pandemic I think this region really did um um dodge a bullet when it comes to food sustainability and food security it could have been a lot worse and I think right now what we've seen with um um DGM with uh with companies like NF they really see the importance of investing in um in companies that have food Security in their Forefront so ni obviously as you've seen the maybe who who who has seen this recently they invested in blue Alo one of our portfolio companies we invested in there about six years ago they recently LED their uh their round with other with other obviously reputable Venture Capital firms but really the this region definitely sees the future on the importance of um of food sustainability and obviously climate change and within that um food security question there's a lot involved with that of course um the um uh the role of innovation particularly where you focus as as a venture investor uh what is the most interesting area on which you're placing bets synthetic biology obviously has enormous promise uh genetic modification has for a while and people like Bill Gates have been calling for a new uh GM Revolution or Green Revolution for Africa in agriculture uh where where are you placing your best so we're we're not necessarily bearish we're not necessarily um um overlooking any industry that you mentioned so GMS are definitely one the ones that are on the table uh especially when it comes to biology so we've been we've been the First Investors in um in plant-based proteins and sell agriculture sell agriculture for us really do does draw the road map for a a a a really brighter future for for sustainability Greenhouse Gras emissions from the animal agriculture industry represents roughly 20 % of um of the climate um of climate effect um and we can easily mitigate that through technology obviously scalability runs a huge issue with that but we're actually solving these issues as you speak right now uh companies like um um upside Foods who who are leading the way when it comes to Sellar agriculture um we're going to be hearing some really important news and really big news from them I would say in the coming year or two when it comes to scalability so I think scalability really um marks a huge um important role in any decision making for any company to invest into these um into these um sectors and we've seen companies uh like impossible scale so we are we are seeing penetration of alternative proteins um there are questions of course uh acceptability and so on but the climate aspect you point out is clear agriculture methane emissions are a huge topic of discussion at this cop that's coming up uh The Economist have just have a leader and and Lead story in this week's Economist arguing the case for methane control initially with oil and gas but clearly Agriculture and the sources that you talk about um will be more challenging and Innovation could play a role there presumably sure I mean if we only take a small example I mean if we if we were to work on um replacing 11% of the meat of the protein the meat protein that's being produced in the world and and make it into either plant-based or S agriculture based we can easily mitigate about five gigatons five and a half gigatons we which is roughly so if I were to put it in context the US entirely produces about five and a half gigatons a year of of of grand house gas emissions right so 11% is a huge number uh when it comes to perspective you know to paraphrase an old uh saying from the US Congress a gigaton here a gigaton there pretty soon we're talking about real emissions reductions right so it's worth scaling to that effect if you don't talk gigaton don't come talk to me right that's that's the other half of that adage um uh I wanted to talk about the outlook for investment since we are obviously here at um one of the uh climate Finance capitals of the world an aspiring Center and hub for future climate Finance um uh this is I'm reminded of Dickens this is the best of times and also the worst of times in some ways for for uh climate Tech Finance for uh clean investing obviously the opportunity is huge we see the momentum of uh uh the cop but also the opportunity to uh dramatically increase clean energy uh invest policy support whether it's the IRA law in the US or european support on methane just passed a few days ago at the European Union as well as China continuing to invest uh but we also see of course uh uh the the headwinds an era of inflation higher interest rates true a lot of Renewables and low carbon projects are high capex low Opex uh that tends to be a challenge in high interest rate environments to invest um and so when you and the kind of risk environment we're in especially for developing countries that need to get the trillions of capital in climate that needs to come not billions but trillions perom that the iea forecasts uh how do you deal with this what could be potentially a challenging few years in uh investing in this space for startups bridging that uh what's called the bridge to bankability to scaling towards commercial markets well I think uh there are a number of ways that you can U mitigate that well I I think putting a lot of the not the blame but putting a lot of the responsibility on consumers is is is very unfair uh I think corporations need to lead the way I think governments need to lead the way and obviously um if if you ask me the uh the capital of the world when it comes to um leading the way for climate for mitigating climate change is the Middle East is Riyad and the there's no doubt about it um so really mitigating that uh respons responsibility off the consumer and actually placing it on governments and placing it placing it on corporations is the right is the right approach so a popular point I can see some startups that are capital star of looking for funding applauding but hopefully there are also people who are holding the purse ready to open up the purse to share the money as well let's let's see if we can get both sides of the equation together here yeah so there are a number of ways that that we have to mitigate this but obviously this is one way obviously the other ways are are are um um creating funds like Breakthrough energy Ventures breakthrough energy Ventures is is uh is a portfolio sorry breakthrough energ Ventures Al philanthropies which is um my father's um philanthropic arm has invested in the Breakthrough energy Ventures and I think breakthrough energy Ventures is one of the leading organizations that can really uh help out um in making these um these big claims more importantly one one organization is not going to make a difference we have to have a collective um effort with all with a lot of organizations working on moonshot ideas because the end of the day as much as I do believe in climate change I am not necessarily A A A doomsday believer but I but there is nothing wrong with acting with urgency now whether we believe that climate that the climate crisis is going to be disastrous in the next five years in next 50 years it doesn't make a difference for me the most important thing is to act with the urgency right now to mitigate anything that might happen and we're actually feeling the effects of it now so climate deniers I'm not sure what what what Kool-Aid they're drinking but we need to move away from from that and actually and actually move into actually in reality so how do you leave aside the those with their heads in the sand the ostrich climate deniers um uh if you just have hard-headed Market realists who say look um as you know we have fuer responsibilities we we invest to make returns and we have uh pensioners that depend on us we can't be throwing money away at every crazy idea that comes along would you hear that more con conventional kind of challenge to um uh what should be the uh good stewards of of a country's patrimony right Sovereign wealth funds are meant to be saving those resources and husbanding them and investing them in Wise ways for the future of the country's own next Generations what's the case you make especially in this part of the world um where which is blessed with a natural Bounty of fossil resources as well as an untapped Bounty thus far of sun and other renewable resources how do you make that case to open up the purse and invest in the future well I think this region has has been um um Monumental and a a poster child for the world when it comes to um um extracting wealth from from um fossil fuel what are they using it is the question and we're clearly look where we are we're clearly using it in the right direction I mean we've seen Sovereign wealth funds from pif from abui um from all the Sovereign we wealth funds in abui leading with the muad and and them all uh we really see a huge amount of capital being invested in this in this area the more more the more important thing is I think Sovereign wealth funds by definition have the responsibility to their people uh for investing into these uh into these sectors but creating smaller funds rather than the giant larger funds um because the end of the day Innovation is what's going to drive change and Innovation is not going to try um Drive change with companies that are capitalize at a billion dollars they're going to be the the the young entrepreneurs who are starting their um their uh their businesses in their in their backyard and their garage and whatever you want to call it but in regards to the check sizes Sovereign we aren't really going to aren't really going to do much of an impact it's the Venture Capital companies are going to make the biggest impact then they will lead to the Sovereign wealth funds who can take it on from there very interesting um there is another area in which uh I think you've had some Investments that's in real estate property markets um uh there is a interesting set of uh challenges that that sector poses and including faces from climate change rising sea levels uh other forms of challenges um that are affecting property questions um can you talk a little about how you think about the role of risk management in thinking about uh one of the world's biggest sectors which is property which tends to be quite conservative old-fashioned in its application and use of things like artificial intelligence let's say for analytics and thinking about future of risk luckily for us most of our real estate developments are away from the shore so I think we're safer than kidding um well there'll be other weather effects I'm sure we actually just lost a really good one on on on the palm but regardless of that um I think one of the most important things that we're dealing with is how we work with States and state and and governments and and and um and state funds to see how we can work together in terms of work work with sustainable sustainable practices so um recycling water would be a really important thing we've already did done that in charia we're working on a lot more things when it comes to for example having a nursery our our tree nursery rather we have about roughly 250,000 trees that we've we've planted ourselves and we've bought from from International um um entities and we're making sure that every one of our developments is is um is actually forested so really we have to what we're looking at is we're not we're not looking at this as a as a um a selling point for how green our um our um developments are but more importantly how we can mitigate a lot of the energy uh consumption that these houses are going to need for for the future I mean we've seen record highs um happening this summer and it's not it's not a um an accident you know we've seen regular hides in Saudi Arabia and other places around the world and um we really need to mitigate these things through natural uh conservation as well as Innovation what kind of Interest are you finding ing among uh consumers property buyers let's say the you mentioned earlier we shouldn't put the entire onus on them that's fair but at the same time uh are you seeing any shifting attitudes at all in this region uh in terms of being willing to go for green Properties or being willing to make a choice a preference in favor that might help the developers as a matter of fact uh we have a number of of salesmen in our in our roster in our company obviously we deal with a lot of externals but a lot of the um a lot of the um the questions that come through from to to AR which is our real estate investment arm at KBW Ventures uh is um is sustainability is is how are the houses um cooled are the is the water circulated how much green Greenery is there how many how much um how many trees are there Etc so we and and by the way we do get people walking away if it's not enough for them so the buyers are definitely there and the quality they're asking for is um doesn't reflect only in luxury but also reflects on the the the the necessity of having a Greener house um to to drive their decision so I'm I'm really I'm really pleased to see a lot of consumers adopting this type of mentality that's very interesting it's good to see especially in this this region um there's one other area I wanted to dig into a little bit I know you've got uh some views on green technologies sure um when we think about um energy there's a a huge amount of interest in this part of the world in hydrogen um and I wondered how do you handicap the uh landscape for green hydrogen blue hydrogen of course made from fossil fuels uh with carbon sequestration uh there's even a quest for natural or geological hydrogen that's taking off uh in Oman and other places that's a another uh Frontier kind of area where venture capital is pouring in uh what's your perspective on on this how excited are you or are you a skeptic no we're not really a skeptic honestly we look at the the that landscape as an entirety so we don't look at one greed hydrogen or or other types of of of of green energy but I am extremely bullish on nuclear especially when it comes to the new era of nuclear not not the uh not the 1960s 1950s and 7s nuclear small modular reactors small marinal reactors are really really important because we have a number of of network um um Network investors and entrepreneurs that we we tap into and we talk to on a regular basis especially when it comes to these types of of re factors uh and we're extremely bullish on that regard obviously we've seen the UAE jump jump start when it comes to their nuclear program and we'd love to see a lot more happening uh in the region and uh and hopefully we would as KBW Ventures we would love to lead the role in in terms of these smaller modular reactors so as a longtime advocate of nuclear uh energy at The Economist we argued if you are serious about climate change you would keep it on the table as an OP you keep it on the table I and remove lot of bureaucracies around it unfortunately uh but the the new generation of smaller more modular approaches clearly has a lot of promise but you know let's let's speak frankly there have been some setbacks of late there has um the the leading project in the US is just wound up shop uh for because cost grew out of control we have seen um similarly challenges at some of the other early movers uh a lot of them appear to be related to financing costs as well as the traditional supply chain or delays which may be related to the again financing cost sure I what do you think as a finance guy uh what what what can we do about this problem there have been a lot of um a lot of aspects that really dealt a he a a heavy hand when it comes to um um investing into these Technologies Co didn't really help a lot especially with um a lot of the the um the policies that the US adopted towards China so we we understand because I I sit on the board of Al philanthropy Al philanthropy invested in fund one of be breakthrough and energy Ventures one of their portfolio companies was a um a a a modular nuclear reactor I believe that they were going to do some test tests in China unfortunately got blocked it did get blocked so that's a huge setback and when we're talking about nuclear setbacks that's that's at least a threee setback and right now they're restarting it right now and they're talking and I believe there are talks to do it in in the US but unfortunately the US has a lot of red tape when it comes to nuclear I mean to start even talk about nuclear reactors I believe to get to from point one to actually getting an agreement done to to start a nuclear reactor is what 25 to 40 years so it's it's it's as opposed to other places around the world which would take eight years or so right so we really have to cut cut the red tape from that regard and actually just start things moving because the technology shifted and changed a lot since the 1960s we have just 30 seconds now we've talked about number of the reasons why this might be the worst of times for uh impact investing in 30 seconds give us a quick positive view on how it could become the best of times what's the one thing you'd like to see most to improve the picture there is never a bad time to invest in sustainability I mean even though we have um there there are headwinds right now when it comes to the um the rising uh cost of food the rising cost of of of of energy uh still governments need to put in earm Mar a large amount of capital just to invest into these sustainable Technologies because there is no wrong time sorry there is no right time the right time is right now excellent all right on that inspirational note I will uh thank you for your for your kind thoughts please give a round of applause