Impact investment for the postwar urban revitalization of Ukraine

Abstract

In Ukraine, where cities have undergone (and continue to experience) systemic destruction, there are environmental problems, a large part of the inhabitants lost all their property and became forced migrants, the investment attractiveness among private investors is low, since the investment needs are huge, and the expected financial return cannot be fast and high. However, the lack of sufficient financial support can nullify all reconstruction plans. To restore the cities and towns of post-war Ukraine, it is advisable to use various investment attraction mechanisms, because the investment spectrum has expanded significantly in recent years. Impact investing is a relatively new type of investment, but interest in it is growing, as is the volume of impact investing. And the use of impact investments as a potential source for solving/mitigating acute social and environmental problems in war-torn Ukraine is particularly relevant and important. After the war, Ukraine will face unprecedented destruction, a whole complex of social and environmental problems. Despite this, at the government level, investment is recognized as a guarantee of the future rapid and effective reconstruction of the economy, as evidenced by the Memorandum signed with Black Rock. However, we cannot count on traditional investments in a dilapidated country. At the same time, it is worth using the current trend in the capital markets, which consists in the fact that international investors increasingly think about the social impact of their investments when choosing an investment object and strive to create added value in the investment portfolio for the benefit of future generations. It is advisable to use alternative forms of investment that are developing. These include impact investing. Features of impact investing include solving a real and relevant problem for the local community; obtaining a visible, public social result that is measurable and subject to calculation; return and profitability of investments. A common instrument of impact investing is bonds, which are divided into three groups: social, green and sustainable. All of them can be used in post-war Ukraine. As the experience of developed countries has proven, by attracting funds from the placement of sustainable bonds, it is possible to solve those problems that will be relevant for post-war Ukraine, namely housing construction, transport, social infrastructure facilities, and the development of sustainable agriculture.