Read the report of this WED WEB CHAT: Look For Profit Before Social Impact
IN recent decades, the world has woken up to the fact that Earth needs help. That the relationship between corporations and people are fraying.
Having ravaged the planet’s resources in the pursuit of progress, mankind faces a tricky situation. Keep going, and we could be living on a planet devoid of resources. Or, stop and reconsider how things are done, and do it better, safer and smarter.
In adopting the latter stance, there have been several initiatives to save the planet (and essentially mankind). The spectre of climate change and its potentially devastating consequences has stirred many organisations to adopt a more sustainable mindset.
This has also resulted in opportunities to make money as new investment instruments have emerged to champion the causes. Mankind will never let an opportunity to make money slip through its fingers.
By intertwining investment opportunities with socially good outcomes, Impact Investing has emerged as one of the newer areas of focus.
It’s a lot like traditional investing, but impact investing has the added requirement of involving companies or funds that can have a positive impact on environmental, social, or governance (ESG) issues.
This is a wide spectrum of opportunities to work with; a formative space for funds to find causes that will yield a positive impact.
Impact investing is still a relatively nascent movement that is finding its way, but it has caught the eye of big investors and socially-aware philanthropists who are keen to consider improving the circumstances of societies globally. And the positive light that bounces back on their reputation can’t hurt.
Help Where It’s Needed
“Philanthropy is the one sector where non-experts tell experts how to do their job,” comments Naina Subberwal Batra, CEO of AVPN, a regional social investment network that channels funding and resources for positive impact on the ground.
“Funders, just by virtue of having the power of cheque writing, also see themselves as ‘experts’ able to direct social programmes on the ground,” Naina explains.
Instead of philanthropists or organisations handling the reins when it comes to delivering funds, they hand them over to organisations like AVPN who then muster the various funds and deliver them where they are needed.
Jayesh Parekh, who has had a lively career with large organisations such as IBM and Sony Entertainment Television, which he co-founded before successfully exiting in 2013, is now the Managing Partner at Good Startup, which invests worldwide in alternative protein companies.
Jayesh notes that “balancing impact and economics is an art rather than science”.
Prof. Dr. Jack Sim, is well known to many as the globetrotting founder of the World Toilet Organization. Often referred to as the King of the Throne and the Number 2 Man, he casts a quizzical eye on start-up ideas.
“Many start-ups started out wanting to save the world, but ended up trying to save themselves,” Jack states.
The possibility of failure is something investment firms have to contend with in this space. Impact investing is often an area that many mainstream investors have avoided in the past, given the uncertainty of the terrain. But that view is changing as the experience and expertise flow into the sector to create viable opportunities tinged with a patina of good.
Does impact investing yield profitable returns with that do-good factor to generate a win-win situation? Or is it a flavour of the moment that’s trying to spark life into an old formula? Is it an avenue for corporations and rich folks to do some effective reputation management?