Making an impact: Municipal Coalition aims to broaden muni appeal
The Municipal Impact Coalition, a group of market professionals, is expanding its drive to make municipal bonds more accessible and understandable across the nation and around the globe.
It aims create a standardized uniform language about socially responsive infrastructure projects as impact investing provides a way to support social and environmental goals through securities that also produce solid financial returns. The Coalition has been working with underwriters, investors and state and local governments to create a way to analyze and quantify just how impactful U.S. public infrastructure projects are now.
The Coalition wants market participants to have a universally recognized “Social Rate of Return” on these projects, which are aimed at improving the daily lives of people in various local communities as well as lowering costs for those who are raising funds for the public good.
“To bring broader interest to the public infrastructure markets in the U.S. and around the world, we need a transparent, rigorously defensible, objective process guided by thought leaders in the industry, academia and non-profit spaces,” says Matt Posner, founder and CEO of the Coalition.
He said that while “green bonds” have been the traditional starting point to discuss environmental issues in relation to munis, there is more to it than that.
“The industry is missing a much larger pool of capital with investors who care about 'impact' in a broader lens: education, healthcare, transportation, energy, water and sewer, development, all are project sectors that affect our communities nationwide and currently are not viewed under the ‘impact’ lens,” he said.
The Coalition not only wants a new generation of investors to reevaluate the way in which they view the municipal bond sector, but also wants to help those international investors who want to invest in American infrastructure but are currently asking for a universal language.
UBS Financial Services said that its public finance department is looking forward to partnering with the Coalition in order to extend the firm’s commitment sustainable investment.
“We fundamentally believe any serious focus on sustainable and impact investment must consider the municipal bond market as a natural provider of meaningful opportunities in the space,” said Mark Price, a UBS executive director.
“We also believe that for our municipal bond issuer clients to take full advantage of investor demand for sustainable and impact investments, there needs to be a natural evolution of a widely accepted set of metrics to measure the impact of projects funded by the municipal bond market,” Price said. “The work the Municipal Impact Coalition is undertaking fits squarely with our mission and we are delighted by the opportunity to work with them.”
Hector Negroni, CEO of FCO Advisors, said the Coalition’s goals will help the municipal bond market as a whole.
“With an industry-led impact measurement framework developed by the Coalition, the public finance market can better identify itself as a source of positive social and environmental investments for the one of the fast-growing investor classes, mission-driven investors,” Negroni said. “There are trillions of global investment dollars with responsible investing mandates looking for a home. A uniform, transparent measurement system for municipals will attract that capital towards the needs of state and local governments for essential service and sustainable infrastructure.”
Negroni said that a framework was needed to help advance global understanding of the U.S. market.
“Most people appreciate that the municipal market is the ‘original’ impact market, but without measurement tools, it is hard bridge the divide between our market and the large pool of global institutional and mission-driven investors,” he said.
He added that standardized data and language would help his both the company and its clients.
“Uniform, data-driven and transparent metrics to measure the non-financial impacts of investment activity are becoming a standard for the global institutional investor community which represent a majority of FCO’s clients,” he said.
The Coalition has gathered industry thought leaders who recognize socially responsible-interested investors exist both in the United States and overseas.
Members of the coalition include: Will MacPherson, head of the municipal finance group at Ipreo; Matt Hodgson, the technical architect for new municipal initiatives at Ipreo; Jane Campbell, director of the Washington, D.C., office of the National Development Council and President of Women Impacting Public Policy; Julie Egan, director of municipal research at Community Capital Management; Rodrigo Garcia, Illinois Deputy State Treasurer; Michael Belsky, executive director of the Center for Municipal Finance at the Harris School for Public Policy at the University of Chicago; Justin Land, chief municipal strategist at Wasmer, Schroeder & Co.; Cary Krosinsky, lecturer within sustainable finance at the Yale School of Management and a faculty advisor on energy studies at Yale College; Stephen Winterstein, managing director of municipal research at Wilmington Trust; Mike Bloomberg, project manager for the Jacobs Institute at Cornell Tech and the co-founder of the infrastructure data technology startup Groundwork; Justin M. Underwood, director of federal policy and fixed income research for the Bond Dealers of America; James McIntyre, director of Capital Markets for the New York State Division of Housing and Community Renewal; and Danford Peterson, chief investment officer at Fundamental Infrastructure Impact Opportunities.
Posner was most recently head of market strategy at Neighborly. Before that, he was one of the founders of Court Street Group, which provides weekly analysis of public finance matters. And prior to this, he was a managing director at Municipal Market Advisors. He spent most of his childhood abroad in Senegal, The Gambia, Bolivia and Peru. He is a graduate of Georgetown University with degrees in Government and History.
“As recently stated by our Chief Investment Office, ‘a significant subset of [the municipal bond market] represents bonds whose proceeds specifically fund projects with social or environmental objectives…’ [Sustainable investing | Education primer: Sustainable municipal bonds, Aug. 1, 2018],” said UBS’ Price.
Posner said he hopes more bond market participants will join with the Coalition in order to educate and inform more people about municipals bonds. “Join us in supporting schools, hospitals, transportation, energy systems, housing and our water and sewer authorities,” he said.