I was at the Skoll World Forum last week, which was a huge celebration of “social entrepreneurship” – celebrating entrepreneurs solving social challenges around the world. I was there with my investor and funder hat on – meeting entrepreneurs, hearing the stories of other individual and institutional investors and looking forward to creating more change by collaborating in how we invest our capital.
One of the things that came up was that this whole area is not “business as usual”. These are, right now, unusual businesses and pretty unusual entrepreneurs, too. They are outstanding in part because they are committed to making a success of enterprises with social and environmental outcomes at their core. And for many people at Skoll World Forum, the future is clear too: impact investing should not be business as usual. It should constantly challenge the status quo and strive to shift financial markets.
In many ways, they are absolutely right. The last thing those of us who are investing in impact want to do is to reach the point where this is about greenwashing, pinkwashing, or doing a little good with practices that are fundamentally not, where some measure of social impact covers up a multitude of social and environmental sins. Simply saying an enterprise has created 100 jobs is not necessarily deep commitment to impact: are they good jobs? Do they pay fair wages? Do they provide upward mobility? Are they sustainable in the long-term? Do those workers have a voice, do they have agency?
We absolutely need to maintain integrity. My impact investing is about creating positive impact, not simply about mitigating or avoiding negative impact, and so that commitment to real change and real good needs to remain at the centre of our movement.
However, I am an investor as well as a philanthropist and I, like many others, do, in fact, want this to be business as usual. I want impact to be considered in every one of my investment decisions – and every investment decision of my peers, and our financial and philanthropic institutions, and our pension funds. Right now, when I talk to wealth managers, it is often an odd conversation. It is unusual for me to ask them to compare and contrast funds on the basis of social impact – but it shouldn’t be. I do want this to become business as usual, but I don’t want to water it down. There must be integrity.
Within five years, I would love for my peers to be able to talk to their wealth managers about impact and have those managers really understand what we mean. I want us to be able to state our impact criteria and see it applied to every investment – from real estate investment to venture capital trusts, from public equities to angel investments. I want us to be able to look at ESG (Environmental, Social and Governance) factors and impact metrics across all asset classes – and I want for us to be able to compare and contrast. There need to be enough investment vehicles so that we can invest in a way that supports our diverse impact priorities.
For each investor, those priorities will differ. I may want to focus on human rights and sustainable livelihoods for women and girls, access to clean water, climate change, one of my investor friends might care about access to healthcare for disadvantaged populations. We should both be able to have those conversations with our advisors and have them understand what we mean. It should no longer be a strange conversation. It should be business as usual.
We are on a path right now. I know that some of my fellow angels in Clearly Social Angels came to us because their private bank or family office recommended it when they asked about impact investing. And yes, right now, there may not be enough products across all asset classes – there may not yet be enough enterprises at the point of scale where we can make the kinds of investments we would like to. But the time is now for wealth manages to understand this space. It is time for people to stop talking aboutthe myth that you cannot make money while creating positive impact – I have been doing this for fifteen years, and let me tell you: yes, you can. (You can, of course, also lose money – as you can with every other asset in your portfolio.)
I love investing in private enterprises focused on social change. I love collaborating with foundations and others to scale non-profits too. But as the spectrum grows, as more ways to invest for impact and more products appear in the mainstream, it is time for more wealth managers to offer individual investors genuine choice, across a whole spectrum of investments. My friends and I do not want to simply divest from fossil fuels, or screen portfolios for negative environmental impacts. We want a portfolio that creates genuine social change, across all asset classes. The time is now for advisors to step up and join in – because this impact investing thing is really happening.
This post originally appeared on ClearlySo