Project Nature Finance | Fondation Valéry

The challenge

Tens of thousands of foundations and family offices collectively invest hundreds of billions of dollars of investments to protect and enhance their underlying capital. Switzerland itself accounts for around 13’300 foundations managing around 135 billion in assets. There is a long history of seeking to align these investments with their front-of-house mission, therefore, an entire industry of intermediaries has evolved to support more aligned investment strategies.

The majority of these strategies are, however, only ‘modestly’ mission-aligned because of actual or perceived fiduciary constraints, and the ‘natural’ conservatism of most trustees and directors. Most mission-aligned approaches principally focus on negative ESG screens across highly related fixed income and publicly traded equity. By doing so, many foundations end up financing companies through equity and bonds while deploying their profit to counter the negative effects created by those same companies.

135 bn.

in assets is managed by around 13'300 foundations in Switzerland.

The solution

The proposed solution is to revisit what is possible with three design criteria in mind. The first is to enable managed endowments to be deployed across a wider range of asset classes that offer greater upside sustainability potential. The second is to provide a greater focus on nature positive investments. The third is to provide greater opportunities for smaller endowments to be more mission impactful in their management.

« Fondation Valery recognises the need and has the will to increase its impact by extending its ability to deploy its endowment in ways that deliver mission aligned outcomes [...] »

Three core pillars are envisaged in building an approach with these criteria in mind.

The first pillar will be an exploration of innovative de-risking financing mechanisms that could be used in endowment management to enable more adventurous, mission-aligned investments, including options for reducing risk through combined investments.
The second pillar will be ways in which such a mechanism might be institutionalised in a way that it could serve a wider community of endowed institutions and be high trust and self-financing.
The third pillar will be specific to nature in building out a nature focused investment framework and related set of rules that make it easier and cheaper and more attractive broadly for endowed institutions to seek to make nature positive investments.

Fondation Valery recognises the need and has the will to increase its impact by extending its ability to deploy its endowment in ways that deliver mission aligned outcomes, including nature positive outcomes. Moreover, it recognises that meaningful solutions are likely to be cooperative and require financial and institutional innovations. Partnering with NatureFinance in advancing this initiative in the context of the Nature Investor Circle enables the strengths of both organisations to be leveraged with associated synergies.

High impact potential opportunities are worth investing time and effort. NatureFinance and Fondation Valery have an ambition to explore if there is a practical way in which this high impact potential opportunity can be realised.