Interview: Carl Black, Deetken Impact
Carl Black is a Portfolio Manager with Deetken Impact, a Canadian impact investment manager with offices in Vancouver, San Jose, and Lima.
They are nearing US$100 MM in assets under management through the management of three funds: Ilu Women’s empowerment fund (Ilu); Honduras Renewable Energy Financing Facility (HREFF), and the Caribbean Basin Sustainable Energy Fund (CABEF).
They continue to raise money for all three funds and are excited to have recently announced a partnership for Ilu with Pro Mujer, a women’s development organization based in NY and with operations in Mexico, Nicaragua, Peru, Bolivia, Argentina.
Based in Lima, Peru, Carl is responsible for shepherding investment opportunities from preliminary screening, through due diligence and investment committee approval, and asset management.
In addition, he researches and writes, including recent work with the World Bank, United Nations, and the Asia Pacific Foundation of Canada, not to mention his personal travel blog.
Name: Carl Black
Business: Deetken Impact
Title: Portfolio Manager
Education: MSc. Economics for Development, University of Oxford
Location: Lima / Vancouver / San Jose
What inspired you to work in finance?
When I read about social entrepreneurs and impact investors, I often come across stories of people that have left jobs with large investment banks in order to put what they’ve learned to work to do good. These people often planned for and expected to find themselves working in finance. I did not. I was halfway through my undergraduate studies at the University of British Columbia (UBC) when the collapse of the investment bank Lehman Brothers in 2008 turned a subprime mortgage crisis in the United States into an international financial crisis. This was not a very effective way to promote work opportunities in a sector to an undergraduate starting to think about life after graduation.
Instead, I pursued work in research. I focused initially in the wake of the financial crisis on the Canadian mortgage market at the Bank of Canada. But increasingly, inspired by travel in Northern Africa, I focused on international development. That interest led me to my master’s degree in economics and international development at the University of Oxford where I wrote a thesis about the impact of land-ownership institutions on income in Ethiopia.
What made you decide to work at Deetken Group?
Through personal connections back home I was introduced to the President of the Deetken Group, a boutique advisory firm in Vancouver. In addition to its core management consulting services, the partners of the firm were also managing a private capital pool focusing on investments in financial inclusion in Peru and elsewhere in Latin America. Intrigued, I joined the Deetken Group as an intern and ended up working for 5 years as an Analyst, Associate, and then Principal consultant.
During that time, I supported the founding of Deetken Impact by contributing to business planning, social impact measurement, and investment due diligence. I also started from scratch and became fluent in Spanish. In 2016, inspired by the opportunity to promote international development through impact investing, I joined Deetken Impact when its first fund closed. We also recently started working with OPIC, the United States development finance institution, as part of the 2x Challenge, a G7 collaboration to invest US$3 billion in projects that support women and girls in developing countries.
What advice do you have for others who want to invest responsibly?
When I first started investing personally, I was an undergraduate and unfamiliar with my investment options. I spoke with a financial advisor at my credit union and invested in a mutual fund in early 2007. Needless to say, my timing was bad. The global financial crisis was not kind to the performance of the investment. As I considered how to adjust my portfolio in subsequent years, I discovered how opaque my mutual fund investment was. It was like a Russian doll of funds investing in other funds. I’ve since emphasized knowing in what sectors and companies I’m ultimately investing. This seems to me the first step to investing responsibly and in a way that aligns with your values and broader investment objectives.
What is your perspective on investing in renewable energy projects?
I spent much of my time as a consultant with the Deetken Group working on energy projects in British Columbia. This work included engagements with private sector clients studying solar and biomass opportunities, and work for the BC government as it engaged with large multinational corporations on the development of liquefied natural gas export facilities. This work gave me interesting insight into the project development and investment decision making processes of large energy companies such as Shell, and Chevron. It also was invaluable experience as I transitioned from consulting into an investment professional.
I am currently the Portfolio Manager for two renewable energy funds, HREFF and CABEF, focused on investing in renewable energy and energy efficiency in Central America and the Caribbean. To date we’ve approved 13 investments in the Dominican Republic, Guatemala, Honduras, Nicaragua, Costa Rica, Panama, and Trinidad & Tobago. Meanwhile, we are also assessing projects in Jamaica, Guyana, Haiti, and the Bahamas.
I’m convinced that the opportunity for investing in renewable energy in the region is enormous. Many electricity markets in the region are characterized by high energy prices, unreliable and inefficient grids, reliance on imported fossil fuels, and low renewables market penetration. Falling prices for solar and other renewable technologies and opportunities for contracted revenues at attractive prices make for a compelling business case.
What is your opinion on the value of ESG in companies that you invest in? How do sustainable values influence your decision to invest?
ESG is fundamental to my personal and professional investment decisions. I just read last week that the US-based Business Roundtable of 181 CEOs (including those from Apple, Amazon, ExxonMobil, and Goldman Sachs) had redefined the purpose of a corporation as benefiting all stakeholders – customers, employees, suppliers, communities, and yes, still shareholders.
This recognition that companies that are well governed and paying attention to social and environmental impacts perform better is integral to Deetken Impact’s investment decisions. Indeed, for all of the renewable energy investments from the CABEF and HREFF funds we require and validate compliance with the IFC’s Performance Standards. Visits to indigenous communities, meetings with employees, and studies of potential impacts to biodiversity are all common in our investment due diligence.
What was your first job and what did you take away from the experience? How did you discover your passion for working in the field?
My first job was stocking shelves to help set up a new dollar store in my hometown. I later paid for University by working in retail at a hardware store, as a dishwasher and cook at a restaurant, and as a custodian at a church. More than anything, from these experiences I learned to work hard and to earn my goals. After graduating from UBC, I moved from Vancouver to Ottawa and worked as a research assistant in the Canadian Economic Analysis Department at the Bank of Canada. Like everywhere I’ve worked, I was lucky to work with kind, smart people from whom I learned tremendously. It was also my first exposure to working in finance, given my focus on studying mortgages, home equity lines of credit, home equity loans, and consumer credit in Canada in the wake of the 2007/8 global financial crisis.
What advice would you give to your younger self about finance?
In recent years I have been attending the annual Global Alliance for Banking on Values (GABV) conference as a guest of the Peruvian Cooperativa Abaco, a member of the Alliance and a partner with Deetken Impact. VanCity is also a member of the Alliance, an investor with Deetken Impact, and hosted the 2019 conference in Vancouver. At the 2018 conference in Arequipa, Peru, the CEO of the GABV, Marcos Equiguren, addressed the gathered global audience and spoke about the need to broaden the financial sector’s focus beyond profit to include people, and the planet. He called for the CEOs and other institutional representatives to continue to “change finance to finance change”. I’d give his advice to my younger self.
What is next? Where do you see your personal investing portfolio in 5 years?
When I was studying economics at Oxford, I was introduced to a great quote by the Economist Robert Lucas reflecting on questions of economic growth:
“Once one starts to think about them, its hard to think about anything else”.
In the same way, once you see firsthand that with your investments you can do well and do good, your investment philosophy will change. In other words, once you have invested in impact, it is difficult to invest in anything else. Consequently, I expect that over the next five years an increasing share of my personal investing portfolio will be focused on impact sectors such as renewable energy, financial inclusion, and healthcare.
Connect with Carl Black at Deetken Impact