Beyond goodwill: How to create sustainable impact with philanthropic capital
HSH Prince Max von und zu Liechtenstein, chairman of LGT, shares how families and entrepreneurs can create long-lasting impact for future generations
Zann Kua JH
WHILE money chases profits, philanthropic capital pursues impact, yet both face scarcity’s call. This is why funds dedicated to philanthropy require careful allocation to maximise their beneficial impact.
“Philanthropic capital is incredibly free or unrestricted because it doesn’t require financial return,” says His Serene Highness (HSH) Prince Max von und zu Liechtenstein, chairman of Liechtenstein-based private banking and asset management group LGT.
“Nevertheless, like all other forms of capital, it is limited and scarce. As such, it’s very important to be ambitious with that capital to make sure that it is impactfully invested,” he adds.
The experienced impact investor was speaking to entrepreneurs and business families in Singapore at an exclusive fireside chat organised by LGT Private Banking Asia Pacific and the Business Families Institute at the Singapore Management University (BFI@SMU) in February.
Under Prince Max’s stewardship, LGT was one of the first organisations in the world to apply venture capital principles to philanthropy through the founding of LGT Venture Philanthropy in 2007, which then led to LGT’s first impact investment in 2009. Prince Max also founded Lightrock, a firm that invests in companies to generate both impact and financial performance surrounding the themes of people, planet and productivity for good.
Drawing on his extensive background in impact investing, private equity and investment banking, along with a deep family tradition of philanthropy, Prince Max offered his take on the evolution from traditional philanthropy towards impact investing.
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“Philanthropic capital is incredibly free or unrestricted because it doesn’t require financial return. Nevertheless [...] it’s very important to be ambitious with that capital to make sure that it is impactfully invested.”
HSH Prince Max von und zu Liechtenstein, chairman of LGT
Traditional philanthropy typically involves the passive disbursement of funds to charitable causes. However, LGT Venture Philanthropy’s approach goes beyond funding, as it seeks to enable portfolio organisations’ success through the right mix of funding, business expertise and access to relevant networks.
Valuing true impact
Measuring the precise effects of impact investments remains a key challenge. Yet, Prince Max asserts that investors should not let this hinder them from seeking maximum impact from their capital.
“Impact isn’t that easily quantifiable from a dollar, precise, financial perspective. Having said that, investors should make efforts to consider impact in their investment decision,” he says, emphasising the importance of integrating impact into the decision-making process.
This is especially as the world continues to face profound challenges, from social inequality to the climate crisis – which Prince Max deems to be “a very significant long-term threat for humanity”. As part of its fight against climate change, LGT signed a ten-year carbon removal agreement with carbon removal company Climeworks in 2021 to eliminate 9,000 tons of carbon dioxide from the atmosphere.
Indeed, the group’s commitment to environmental sustainability can be traced back to the core values of its 900-year-old owner, the Princely Family of Liechtenstein, which has always prioritised long-term thinking (see “Make an impact with the Princely Family”). The family’s first investments were in the forestry and agriculture sectors, reflecting its long-standing connection with the environment.
Make an impact with the Princely Family
Founded over 100 years ago, LGT Group offers clients a unique opportunity to co-invest with the Princely Family of Liechtenstein. Through its flagship Princely Strategy funds, clients can invest alongside the bank’s owners, offering confidence and steadfastness.
Investing with the Princely Family appeals to clients with long-term ambitions, particularly entrepreneurs seeking to preserve wealth over generations. As a family-run business with a simple and stable ownership structure, the bank can pursue a long-term and sustainable strategy.
Today, LGT employs over 5,600 people in over 30 locations worldwide. As of Dec 31, 2023, it managed assets of CHF 316 billion (S$467.9 billion) for wealthy private individuals and institutional clients.
Sustainability is core to the group’s DNA. As a leading sustainable investing company, LGT Group embraces this principle across all of its activities, and offers a broad range of sustainable investing solutions, including sustainable portfolio management and investment advisory, sustainability funds, and impact investing solutions.
The group also pursues its sustainability agenda through its partner company Lightrock, a global private equity platform founded by His Serene Highness Prince Max von und zu Liechtenstein to invest in businesses seeking to deliver tangible societal or environmental benefits.
LGT and the Princely Family have been the anchor investors for Lightrock, which has been focusing on investments in crucial areas like healthcare, environmental challenges and social issues.
For example, in 2019, Lightrock made an investment in Waycool, a leading food supply chain platform firm in India. Waycool’s solutions have led to a significant reduction in food waste from 40 to 8 per cent, while enhancing the livelihoods of over 50,000 farmers that it has worked with.
To combat climate change, Prince Max emphasises that financial institutions and investors need to scale superior technologies and business models, encourage mature businesses to decarbonise, and consume and source more sustainably.
Looking ahead, he is hopeful that impact investing will become more mainstream as more companies are expected to integrate impact into their investment and business decisions. He cites exciting opportunities on the horizon, such as enhancing productivity through artificial intelligence, and accelerating progress in drug discovery in healthcare.
He says: “If you integrate impact into your thinking, it can make your business far more sustainable and resilient over the long term.”
Expert insights
The fireside chat with His Serene Highness Prince Max von und zu Liechtenstein, chairman of LGT, was followed by a panel session with industry leaders, who shared valuable perspectives on how businesses can drive impactful, sustainable change. Hear what they have to say:
On LGT’s approach on venture philanthropy and impact investing:
“At LGT, we solve social and environmental challenges that are inherently complex and context specific. Through local teams in the respective markets where we engage, we support solutions by providing funding, business expertise, and access to relevant networks, while aligning them to our strategy and value creation.”
– En Lee, managing director, head of Sustainable and Impact Investments Asia, LGT
On why collaboration is important:
“The future requires greater collaboration among different parties who can align the various forces at play. Many challenges, whether environmental or social, have solutions in terms of technologies and funding. The real challenge lies in how we can bring these resources and people together to work collaboratively.”
– Cherie Nursalim, vice-chairman, GITI Group
On giving back to the community:
“Establishing trust within the communities where we operate is a key success factor in navigating new and challenging markets. As part of our commitment, we allocate a portion of our yearly profits to these communities and their families. The whole idea is about redistributing part of our wealth to the families around us.”
– Shruti Lohia Hora, director, Indorama Healthcare Singapore
For more information on how you can start your impact investing journey, visit LGT Group.
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