Lauren Burnhill is a seasoned emerging markets credit and investment professional, and a lifelong practitioner of multiple bottom line finance. Lauren’s work creates practical approaches to quantifying social and environmental impact, to using quantifiable metrics to design bankable and sustainable long-term financing programs for micro, small and medium-sized enterprises (MSMEs), and to structuring special purpose financing vehicles in health, affordable housing, clean water and sanitation, renewable energy, and basic infrastructure sectors. Lauren brings strategic planning, management, and experience across a wide range of financial instruments and markets. Her consulting work helps non-profits, for-profits, and development finance institutions to structure and implement sustainable, values-driven funding programs, strengthen lender and investor credit & risk management policies, and improve governance practices. Lauren created Resilience Resources in 2015, a public benefit corporation focused on climate and social resilience.
She will be a featured speaker and panelist at the fifth annual SAIS GWL Conference, Securing a Sustainable Future: Women as Leaders in a Changing Climate on the panel Risk, Reward, Resilience: Financing Gender-Inclusive Climate Solutions at 3:20pm.
Why sustainable finance and impact investment? What motivated you to start OnePlanet Ventures?
Before I enrolled in the joint SAIS and Wharton program, I spent some time working on Latin American development projects. I cared so much about what we were doing and thought we were doing really great work (local resources, local groups, community-based) – but the businesses kept failing, in large part because our team had no members who understood the business issues! We would show up, share ideas, get something really exciting started, but in the end, we were leaving them the same as they were before but with shattered hopes about development projects. This work experience made me choose the SAIS/Wharton program over law school Since earning my degree, I have come to appreciate the great advantage of having the in-depth cultural, anthropological, political and socio-economic contexts from SAIS plus the hard business skills from Wharton. Neither skill set works in isolation, together they are powerful.
Over the course of my career, I had worked with development finance institutions, consulting, investment banking – every seat at the table trying to understand how to finance change. For many years, I ran my own boutique development finance advisory firm in Miami, but it wasn’t enough. Once I’d branched out from Latin America to Africa and beyond, I felt I had to make a change. I closed my firm, left Miami, moved back to DC and joined the international microfinance non-profit, Accion International. One of the deals I catalyzed at Accion had fantastic returns – it quadrupled the size of our asset base. The Board told us not to create an endowment and just do 5% more a year, they wanted bigger and more ambitious plans. Access to finance is important, but but it means little if your kid gets sick and there’s no clinic nearby. I felt we needed to move into “Access to Life” fields: health, education, affordable housing, clean water and energy but my colleagues on senior management preferred to focus on expanding microfinance. Ultimately, I resigned to create One Planet Ventures – the idea isn’t to reduce poverty, it’s to improve quality of life.
The uphill battle has always been that the finance world believes that social and environmental impacts are externalities. All investments have a social and economic impact. The truth is that when we miss a negative impact/externality, there is often an unanticipated cost. At the same time, if we ignore the positive impacts, we miss the opportunity to demonstrate the true returns on investment. Climate and social resilience require long-term finance, and there aren’t always cash flows associated with “public good” aspects of these projects. We need to account for all the positive outcomes if we want to create appropriate financial instruments to tackle long-term challenges.
Have you faced challenges along the way?
I left my dream job at Accion n the middle of a global recession. In hindsight, this wasn’t a great idea. While my impact investment venture, One Planet Investments, almost launched, two weeks before our Series A, the world came crashing down: the US debt was downgraded (and our angel investors were very nervous), the lawyers told me that under Dodd Frank we either had to leave the US or add a quarter of a million to our budget to become regulated and compliant, Pepsi hired my CFO — all kinds of things went wrong and I was down to less than two months living expenses. I decided that I needed to shutter One Planet Investments and speak out about the fact that when something doesn’t work, failure is an option. There is this great push to innovate and try new things but people are still so afraid of failing.
A lot of times I’m the one challenging how things are done – I truly believe that if you do things the same way then you’re going to get the same results. In 2015 I started Resilience Resources – it’s a public benefit corporation, or what is known as “for-profit, for purpose.” We have a next generation investment philanthropy that incorporates the knowledge building, communication, and outreach efforts together with the concept of “demonstration effect” investments.
Resilience Resources isn’t just about the environment or climate change. One of the pieces I felt was missing in the hard-core climate and environmental movements was the focus on people. I’m not saving this planet for the cockroaches to enjoy. – Our practice and methodology link climate and social resilience. Healthy communities also tend to develop robust local economies and management of natural resources can contribute to both. OPV and Resilience Resources are positioned in mid field – working with stakeholders on the finance side, as well as on the climate and social side, to design instruments and strategies that are a win-win for both groups, for our planet and for our society.
How do you see the space evolving in the next 10 years?
I see the field of sustainable finance and climate finance as an ongoing process with a lot of starts and stops. From the finance perspective it seems obvious that any long term investment – and dealing with the impacts of climate change is certainly long-term – needs credit enhancements to attract the investors that may see too many risks to their investments. It’s interesting because you still don’t hear many people talking about credit enhancements as a specialty in this field – someone used a 10% first loss tranche once and that’s almost the only enhancement used. Since we know (or suspect) that in most cases the default rate on these instruments isn’t 10%, having a 10% first loss tranche doesn’t put investors mind to rest about risk coverage.
There are a lot of creative initiatives going on with some of these appealing to the mainstream more than others, and I know at least one will be a spectacular failure. Because it’s a new space and we’re trying new things and failure is an option! But 10 years might be too long, I’d predict we start seeing new, exciting, and successful experiments in the next 5 years. Especially with climate action – there’s so much room for different perspectives and experimentation. This month, I’ll be joining GARI – the Global Adaptation & Resilience Investment Working Group, which is composed of private sector professionals. Many participants also have public sector or DFI experience too, which is great. When it comes to climate change, the challenge is so large and complex that we need to collaborate across the public, private, and NGO sides.