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PNG SUSTAINABLE DEVELOPMENT PROGRAM

MEET PNG SUSTAINABLE DEVELOPMENT PROGRAM

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In 2015, under new leadership, PNG SDP recognized that driving sustainable progress of its community development efforts would require a business-oriented approach, one that maximized investment returns. Since inception in 2001, PNG SDP's long-term investment portfolio was deemed overly conservative, resulting in 1.4% annualized returns over 15 years. The new team at PNG SDP researched endowment investment strategies by reaching out to high-performing institutional investors such as ivy-league colleges and universities in the United States. Ultimately, they chose to partner with Cambridge Associates to overhaul their portfolio to a balanced allocation spanning equities, hedge funds, private investments, infrastructure, real estate, and fixed income. This revised strategy generated annualized returns of approximately 6% outpacing prior performance and is anchored in a strategic asset allocation that's benchmarked against peer endowments. With improved investment performance, PNG SDP's long-term fund has grown to $1.7 billion enabling them to direct significant capital into Western Province programs. Since 2019 alone, more than $250 million has gone toward healthcare, schools, solar energy, agribusiness, and more, with plans for continued expansion.

Western Province, the largest area of Papua New Guinea, covers 97,000 square kilometers and is home to approximately 200,000 people. After the Ok Tedi environmental disaster in 2000, Ok Tedi mining company relinquished its ownership stake as compensation to the people of Papua New Guinea and in 2001, the PNG Sustainable Development Program (PNG SDP) was formed to steward those proceeds to benefit local communities in Papua New Guinea's Western Province region. PNG SDP's objective was to carefully manage these funds and supplement government efforts to advance healthcare, education, infrastructure, economic initiatives, and overall living standards in the severely underdeveloped Western Province. With strong governance as its foundation, PNG SDP serves as a catalyst for strategic community development.

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eSTABLISH STRONG GOVERNANCE UPFRONT

lEVERAGE PARTNERSHIPS TO ACCESS SPECIALIZED EXPERTISE

As an impact investor, PNG SDP actively pursues partnerships to implement community-level programs, favoring collaborative efforts with local stakeholders rather than a top-down approach. Instead of limiting itself to a funding role, the organization partners with groups possessing specialized expertise to best achieve development goals. PNG SDP works jointly with partners to execute projects, not merely providing funding. They continuously explore innovative partnership models worldwide to further their mission. The emphasis is on relationships that unite partners’ strengths to drive social change.

Through experience, PNG SDP has learned that driving meaningful impact requires focusing on scaled initiatives rather than spreading resources thin across many smaller projects. As a result, in 2022 they concentrated on a few key, high-impact programs that could be implemented effectively and sustainably to benefit Western Province communities over the long term. Their strategy entails identifying and resourcing a targeted set of initiatives that can generate substantial positive change. And as importantly, their investment approach provides the capital needed to fund these strategic programs well into the future.

0.1 Meet PNG SDP 0.2 Lessons Learned 0.3 Download the PDF Version

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fOCUS ON THE LONG-TERM

PNG SDP employs long-term thinking in both its investment and program strategies. On the investment side, the focus is not short-term volatility but rather steady, diversified growth over time. For programs, there is recognition that meaningful change often involves shifts in mindsets and behaviors, which take time to take root. Rather than quick fixes, the goal is lasting impact across generations. To that end, PNG SDP is now developing an outcomes framework to track long-term results. They remain committed to a long-term investment approach and programs that create lasting community progress, not temporary gains.

LESSONS LEARNED

sCALE sUSTAINABILITY

BLEND BUSINESS AND SOCIAL DISCIPLINES FOR EFFECTIVENESS

The organization is committed to applying commercial strategies for social outcomes rather than profitability. Their goal is to run all of their programs efficiently and effectively, with measurable outcomes. There is also extensive consultation with stakeholders and coordination with the Western Province’s government to ensure resources are maximized.

PNG SDP knew good governance would be crucial to their success from the start. They set up a rigorous governance structure, including being incorporated in Singapore, with oversight from their board, to ensure clarity and accountability. They continue to operate in accordance with their Program Rules, established at the organization’s founding, which include monitoring the integrity of the fund’s systems and processes and assessing the program’s outcomes. In 2022, they commissioned an independent review of their operations and reported that the organization was in full compliance with the Program Rules and continues to deliver effective programs.

Here are five things PNG Sustainable Development Program has learned as they've advanced their investment strategy:

To optimize effectiveness and efficiency, PNG SDP pioneered a "hub strategy" to capture the benefits of scale from shared services, shared infrastructure, and concentrated management. These hubs provide locals with a centralized place to access resources and sell the goods they produce, leveraging economies of scale. They have developed hubs across four locations to deliver integrated healthcare, education, agribusiness, and outreach. Their education program provides a pathway for students who have dropped out of school to re-enter the education system as well as for teachers to upgrade their qualifications, using online learning. The primary care initiative serves 40 remote airstrips along with 58 new cell towers delivering 4G coverage. The organization also transformed an old fish hatchery into an agribusiness hub exporting high-value aquaculture products, vanilla, cocoa, and black pepper. It empowers individual farmers to generate income through a nucleus business model where PNG SDP provides expertise, supplies, and guaranteed export channels. This approach helps farmers earn livable wages by applying advanced techniques while farming their own land. Guided by principles of sustainability, PNG SDP takes a long-view approach in their work, dedicating time and resources to initiatives aimed at creating lasting, meaningful change that will benefit generations to come. With its proven track record and local insights, PNG SDP is now looking at attracting impact investors and mission-driven partners with specialized expertise to expand its reach. With a strong preference for collaborative partnerships over charity, they aim to scale their efforts in healthcare, education, agriculture, and infrastructure by collaborating with innovative organizations around the world.

“Being self-sustaining allows us to take a long view in seeking poverty alleviation that is lasting, with benefits that persist across not just decades but generations.”

—John Wylie, Managing Director, PNG SDP

With a proven model for elevating living standards in rural communities, PNG SDP plans to continue expanding its partnerships across the private and social sectors.

Today, all of PNG SDP's community programs are sustained by income from their Long-Term Fund, established in 2016. The fund pursues two key goals: increasing returns to maintain existing programs and launch new initiatives, while also carefully managing market volatility risks. The Long-Term Fund is crucial for supporting PNG SDP's expanding development projects, so the organization remains committed to protecting and growing this portfolio to maximize its impact.

Community engagement in Dewara.

The rubber rehabilitation site in Kawito.