David Chen '84
CEO and Founder, Equilibrium Capital Group; Lecturer of Social Enterprise at Kellogg
We at Equilibrium Capital Group believe impact investments have to produce market rates of return in order to be sustainable and impactful in the long term. They must be based on sound economic fundamentals of investment, such as risk management and opportunities for value creation.
We think if you work hard enough and think hard enough, you'll find the opportunities where you can tap into market inefficiencies and high-growth opportunities. And you can execute them in a manner that is supportive and consistent with sustainability while delivering an impact for the community and the environment.
We proactively research sector themes and strategies. For example, we looked early on at opportunities in green real estate and saw it as a way to improve both the building's economic performance and the environment. Higher operational efficiency impacts the expense line and attracts commercial and residential tenants who want to be associated with buildings that are not only more efficient, but also represent sustainability. If the developer had a philosophy of sustainability for both community health and environmental health, then we saw the power these buildings had to change their surroundings.
We saw green real estate as absolutely in line with the principles of impact investing. We can give the investor the opportunity for tremendous returns as well as future-proof his or her asset, and yet have an absolute intentionality of creating impact.
In addition to green real estate, our areas of investment include water asset management, sustainable land asset management, energy efficiency finance, green equipment financing, environmental services financing and sustainable agriculture fund management. We're also very intrigued by the future potential of the social investment bond. We invest in asset managers who are executing leading strategies in the area of sustainability. In other words, we invest in investment firms.
As a Kellogg student, I developed tools that prepared me for the first phase of my career, when I spent 20-plus years in high-tech marketing and investing. As I got more involved in the area of economic growth and sustainability, I started to ask the question, "How can finance be a form of innovation to catalyze the adoption of sustainable practices, with the act of investing functioning as a catalyst for change?"
That's the challenge that drew me into this field four years ago when I founded Equilibrium. That's what our firm is dedicated to and that's where I've dedicated the teaching that I do at Kellogg in the Impact Investing course.
Our belief at Equilibrium is that the most innovative managers are finding ways of tapping into market inefficiencies and large macro-growth trends. They have the ability to generate tremendous returns and deliver significant impact. Their success demonstrates that you can do the right thing and make money at it. And in our opinion, those are not contradictory concepts