In brief: ‘Co-linearity’ is not always easy

Comments on stage from TPG's Africa head highlight how the alignment of profit with purpose may not be simple to define.

‘Co-linearity’ is word often used in impact and sustainable investment conversations. It describes when the mission of a company – and by extension its commercial success – is naturally aligned with a positive external impact.

“One of the key components we look for is co-linearity,” said Yemi Lalude, TPG’s head of Africa, speaking at an event on in London on Wednesday run by the Africa Private Equity and Venture Capital Association. “If a business operates in a space where they are not delivering sustainable returns to society, that’s not something we would be interested in.”

The alignment of profit and purpose, however, is not always nice and neat.

“Obviously for companies in sectors like resources it’s a little more challenging, given the nature of it,” Lalude continued. “The resource sector is not a sector we invest in, but it is critically important for the transition. You can’t make batteries without someone doing some mining in DRC; that’s just the reality of it.”

“The irony of this is that none of us wants to invest in mining… so I am not sure how the batteries are being made,” he said, tongue somewhat in cheek, presumably.