The last Open Thread was in October 2017, so I thought we were overdue for a new one.
Use this thread to post things that are awesome, but not awesome enough to be full posts. This is also a great place to post if you don't have enough karma to post on the main forum.
Consider giving your post a brief title to improve readability.
Impact Investing from an EA Perspective
This is just a teaser, since I don't have enough karma for a full post yet!
Picture a scale that has charity one one side (good social utility, -100% financial return) and Investing on the other (zero social utility, 7% financial return). Impact investing is a space that can give similar risk-adjusted market returns as traditional investments, but also provides social utility.
In my research, I've found several factors that make me excited about this area:
Impact investing is about 5% the size of charitable donations (22B vs 410B in 2016), and is growing much faster (17% vs 4% annually)
Impact investing makes up only 0.16% of the total capital markets - huge room for growth
Philanthropic enterprises with sustainable business models can use existing capital markets to get funded on a large scale
Due to the market's current inability to accurately value the 'social utility' provided, there are many greatly under-valued investment opportunities, providing similar social utility as comparable charities
I've got more detail, logic and sources in the full post, but in the mean time, I'll tell you about one example opportunity that I've zoomed-in on.
WorldTree is a company that lets you buy an acre of fast-growing Empress Splendor trees. It's goal is to generate income from the harvest of the trees, and offset the carbon footprint of investors:
From an EA perspective, I compared the stated carbon cost of World Tree ($1.72/tonne) to Cool Earth ($1.34/tonne) and traditional carbon offset programs ($10/tonne). This investment could return a 23% annual return, while the Cool Earth 'investment' would be a loss of 100%. At it's surface, this example does look quite promising when counting both the social utility generated, and the future utility my $20k could do in 10 years time.
Looking forward to posting a more detailed write-up on the space once I'm able, and to hearing your feedback on these ideas!
That's insanely high... social arguments would be irrelevant if you could safely get that kind of return. Every investor would want in.