Investor Spotlight

Investor Spotlight: Mark Grier

Prudential Financial, Inc.

Interview, conducted by GIIN CEO Amit Bouri

October 16, 2017

The Global Impact Investing Network (GIIN) announced the appointment of Mark Grier as its new Board Chair on February 15, 2017. Grier serves as Vice Chairman at Prudential Financial, Inc. Grier’s appointment marks a milestone in the advancement of the GIIN, which will benefit from Prudential’s more than 40 years of institutional impact investing experience.

Amit Bouri: Earlier this year at the GIIN’s Investors’ Council Meeting, you shared a little bit about your personal background and your experience in impact investing. I’d love to hear more about what inspired you to join the GIIN as the board chair, and how this new role fits with your experience at Prudential Financial, Inc.?
Mark Grier: It was my experience at Prudential that inspired me to get involved with the GIIN. Of course, impact investing isn't new at Prudential. Prudential has been an impact investor since the 1930s. It hasn't always been called that, but through my 20-plus years at Prudential, I've been part of a culture for which impact investing comes naturally. The opportunity to extend my involvement in impact investing through this position at the GIIN was something that I jumped at. I thought it made perfect sense to leverage my experience here and the culture that I've been part of at Prudential to advocate for and support impact investing globally. It's a logical extension of what I've been involved in, what I've been interested in and advocated for at Prudential, and it comes at a time when I think this aspect of deploying capital is getting more and more attention.
Amit Bouri: Can you talk a bit more about Prudential's impact investing history? And how that's evolved over time into the current strategies and $1 billion commitment?
Mark Grier: It starts with the notion of a purpose-driven company. Prudential’s initial focus over 140 years ago was on financial security and it originally was burial insurance for blue-collar workers. Financial security sits at the center of our company’s purpose. We originally invested in low-income housing and in loans to small businesses, moving from there to what we call transformational development, which would be some of the bigger things that we've done, particularly in Newark. For example, we spearheaded the effort to restore the iconic Hahne & Co. Building downtown by investing nearly $50M and bringing in a Whole Foods market and other needed amenities. We have also committed over $125M to charter school development, creating over 1M square footage of educational space much of which is in downtown also. All of that follows from the theme of a purpose-driven company for which impact investing comes naturally.
Amit Bouri: As you've seen impact investing grow and mature over the years, it would be great to hear what you've seen change and how the environment has evolved. What do you see as the big challenges for this industry in the near future?
Mark Grier: I think the change, which is still in process, is the realization that it's possible to reconcile the financial attributes of investments with the social attributes of investments in ways that create very positive outcomes. As we have demonstrated at Prudential, there can be a reconciliation of financial returns and social impact, and exploiting the fact that private capital can be deployed for social good with attractive returns. That's the cornerstone of all of this, and I think if there's a change, it's when the light goes off in the minds of investors to realize that capital can be put to work in ways that can deliver more than one type of return. There are plenty of challenges. There's the highest level conceptual challenge of linking social outcome and financial return. There's the practical challenge of motivated investors and donors who are willing to go out and try to do it, and then there's the final logistical challenge of actually making it happen. At Prudential, we have a dedicated impact investing team, and they spend a lot of time on the hardware that it takes to create an impact investing outcome, whether it's more in different structuring, different partners, different terms, different due diligence. There's a lot of custom work that goes on behind what we then tout as a successful impact investment.
Amit Bouri: The possibility of making it happen at least at that conceptual level has really captured the imaginations of hundreds of investors around the world, and also garners support from global leaders ranging from Pope Francis, Mark Zuckerberg, Bono, to notable heads of government on different continents. As we continue to look to grow this market, what are your thoughts on the role of government, and more broadly the role of multi-sector collaboration in the future to make the best of it.
Mark Grier: Governments can play a role in facilitating partnerships and legal structures, and actually enabling the investors who want to participate, to participate. I think it's important and I think it matters that we establish effective partnerships with government. Government's role is, in some circumstances, and with respect to certain deals, absolutely vital, and deals won't happen without it. But then also across the sectors I think we can be a lot more effective if we have different investors, with different views of what they're trying to do, with different risk tolerances, different time horizons. We can get more done if we collaborate across sectors with different components of what it might take to structure the deals and make things happen.
Amit Bouri: One thing that's really emerged that's exciting and certainly has energized many people in the field are these multi-lateral efforts in the past couple of years. There are two in particular, the Paris climate accord and the Sustainable Development Goals (SDGs). We've been pleasantly surprised to see how much energy these have garnered from the private sector. And not just with the enlightened do-gooders if you will, but those hard-nosed investors, fiduciaries from around the world, who are really motivated to think about how they can play a role in the achievement of these goals. I'd love to hear your perspective on how large-scale investors should be thinking about the Sustainable Development Goals and do you find them to be a useful framework or a clarion call for private investors?
Mark Grier: Let me start on a practical level. I think there are a lot of investors who have qualitative interests in impact investing including the two you mention of the Sustainable Development Goals and the Paris climate accord, but they don't know what those qualitative interests mean or where to go with them. By giving people something to hang their hat on, a framework, now there's a greater appetite for this, whether or not they agree with every single clause or piece of it. I think these frameworks give the market direction, what to think about, and hopefully, ultimately, what to operationalize. Then below that, I think you're right, it's generated more interest. The SDGs are out there, people see them, they're discussed. I think a lot of investors feel like they should have answers when they're asked about them. They do create an environment in which things will happen.
Amit Bouri: You mentioned you've spent 20-plus years at Prudential and the values-driven side of the business is something that's been important to you all along, and especially now that you're taking an even greater leadership role in your chairing of the GIIN board. I'd love to know your perspective on what you are hearing or expect to hear from people who are in your peer group. What is the appetite from other executives of major financial institutions, either in the US or in Asia, where you do a lot of work?
Mark Grier: Part of what's happening among executives in my generation is the realization that if you don't do business the right way, you're going to have trouble recruiting the people that you want to work for you, you're going to have trouble with the people that you want to buy your products, and then more broadly, if you have real substantive impact investing and community responsibility initiatives, that can be a huge plus. This commercial motivation maybe is just enlightenment, but it's very real. Also, when you look at companies that have been successful in China, for example, they do genuinely feel an interest in giving back. There is a genuine sense of social responsibility and a genuine interest in making a difference. It's great that a lot of that sense of making a difference is falling into the arena of impact investing. I think domestically and internationally people are feeling like, "I can make a difference that I didn't know I could make."
Amit Bouri: It’s exciting to see growing awareness of impact investing and as people come to learn that impact investing is something they can do, whether they represent a big firm or just on an individual basis. I think it's incredibly empowering for people to figure out how they can align their assets in ways that represent their values and their aspirations for the world.
Mark Grier: I think the idea that the challenges facing the world are someone else's problem is giving way to the idea that I can do something about it too. And I can do it in a way that makes good financial sense.
Amit Bouri: Thank you, Mark.

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