This is a guest post by Jed Emerson, an executive at ImpactAssets, Senior Advisor with the Sterling Group (Hong Kong) and a senior fellow with the Center for Social Investing at Heidelberg University. His book, Impact Investing: Transforming How We Make Money While Making a Difference, was co-authored with Antony Bugg-Levine of the Rockefeller Foundation and comes out the first week of September.
By Jed Emerson
“Impact” is everywhere and clearly the modifier of the moment: Impact Investing, Impact Entrepreneur, Impact Evaluation, Impact Bonds, Impact exchanges, consultants, markets and more…
Falling fast upon my sword, I am as bad as anyone.
I love the insights of an impact orientation! I’ve co-authored a book called Impact Investing coming out in September, am an active strategic advisor to two families pursuing the creation of impact portfolios and accepted the opportunity to devote a good chunk of the rest of my time to being part of the management team for a new, nonprofit financial services firm called—wait for it!—ImpactAssets!
Clearly, the latest buzz is about impact and who wouldn’t like that? I mean, after all, who would launch a strategy with a focus upon being ineffectual? Incompetent Investing just doesn’t have the same ring to it as Impact Investing. We want to do more than simply earn a financial return — we want to actually change the world and so, for better and in some ways worse, the word of the day is: Impact!
The emergence of this idea and its integration with various existing strategies and approaches has raised a host of questions and issues, ranging from how impact investing complements socially responsible and sustainable investing, to how one manages for impact, to how best to assess, measure and describe “impact” outcomes—and beyond.
While these are exciting times, there are indeed moments when our conversations and work can feel like we’re experiencing a collective “Ground Hog Day” moment. “Haven’t we been here before?” ask those involved in community development finance and traditional socially responsible investing? “Isn’t this simply a distinction without a difference?” This is all understandable and while there are definitely answers (or at least ways to think about!) to the various questions and challenges raised by Impact Investing (thus, the book…), if we simply focus upon each individual question and related discussion, we risk missing a much larger opportunity by keeping ourselves at that level of inquiry.
Here’s the point:
We are on the verge of a global capital convergence, a coming together of parts into what promises to be a new, more powerful Whole. If we each allow our commitment to our particular part—to our individual collective wherein we have our shared ideas, friends, funds and strategies—to be our sole focus, we may well miss out on the opportunity to leverage the whole thing—all of it—impact investing, sustainable finance, SRI, responsible investing, community investing, micro-finance, strategic philanthropy, sustainable private equity, fixed income social bonds and notes…the whole damn thing—we run the risk of missing the opportunity to catapult our work from the level of our individual collective to that of a new, shared capital commons.
Let us not forget that our focus should not be placed upon the parts. Rather, it should be locked upon the horizon wherein those parts may morph into a new whole, for what we should be concerned with is our potential for maximizing our total value.
I totally get the discussion and disagreements that have recently taken place in blogs, conferences and various forums. Where you stand depends upon where you sit, so its natural folks sitting in different positions relative to the emergent “whole” will have different — and sometimes conflicting — perspectives and priorities for what “we” should do or for how we understand the relative contributions of different parts of our capital community.
That said, if we each spend our energy simply polishing our own star we risk missing the chance to rise up and cultivate a vision of the common constellation of which we are a part, much less the universe within which that capital commons rests. Words matter; history is what got us here and our visions are what will move us forward yet again. Over more than two decades I’ve had the pleasure of working with many others to help frame our thinking about social entrepreneurship, venture philanthropy, sustainability, performance metrics, the nature of value and god knows what else. I am now focused on understanding more of the phenomenon that has been unleashed under the banner of impact investing.
I am loving our discussions and debates, each of which help us understand and see the deeper colors of the light spectrum we are all a part of. But as we discuss and dive into ever deeper understandings of our shared efforts let’s remember to affirm the capital connections we have across the constellation; as we polish our star let’s not forget we are part of a greater, larger capital spectrum that, when viewed together, promises to shed real light on how we may best advance into the future—together!