>>Hi, I’m Whitney Espich, the CEO
of the MIT Alumni Association. and I hope you enjoy this digital production created for alumni and friends like you. Sayuri: Welcome, everyone, to today’s
webinar. My name is Sayuri Sharper, and I am the president
of the alumni group. Our topic today is “What is
Impact Investing?” And I am very pleased to have
Adam Bendell, CEO of Toniic, and Eric Stephenson, Co-chair of Cordes Foundation
and Director of Client Services at Align Impact here to lead the discussions. Since we only have a very
limited amount of time, I will keep the introduction very brief.
Hopefully just five minutes. So we will start with a quick review of SEAG before presentations by Adam and Eric. You can submit your questions
using the Q&A feature of Zoom. Unfortunately, we cannot respond
to these questions live, but we will go through as many of them
as we can after the formal presentation. You will get a copy of today’s presentation emailed to you after the webinar, so don’t worry, because some
of them have lots of words just to get the information to
you, especially from me, but again, in order to make this webinar very informative, the
intro will be very short. The presentation will be emailed, and the video will be
available on MIT’s YouTube channel. So let me go to the next slide. So who is SEAG? What do we do? There, again, are lots of words
on this slide, but we are not going to go through it.
One thing you should know probably is the Alumni Group is
under the MIT Alumni Association, and we have the staff of the
Alumni Association to thank for helping us get these webinars
set up. But in a nutshell, our goal is
to create a community around MIT that supports social
entrepreneurship, including current students, staff, and
alumni, as well as others that desire to be part of our
community, so we encourage your continued involvement with us,
and we have some interesting programs that are planned for
the rest of the year. Here are SEAG’s current officers.
Lisa and Esther are also on the SEAG board.
I started SEAG last year around October, and I am so thankful
that I enjoyed by four wonderful alumni spirit they are all —
alumnis. They are all attending the
webinar today, and I encourage you to get to know them as well.
So how do you get engaged? Well, last year was our
formation year, and we just had a couple of webinars and about
200 sign-up to be part of SEAG. This year, we are kicking off
the activities with monthly webinars, both impact investor
tracks and social entrepreneur dropped– tract. Feel free to watch both.
You may want to get to know what are the struggles, what are the
issues that social entrepreneurs face, and vice versa, for a social entrepreneur, it would be
interesting to understand the investor’s perspective.
But as we go, rather than these one to many types of
communications, we want to be more interactive community, who
can have ad hoc discussions and share experiences and best
practices. So those are our goals going
into later this year and next year, and if you are interested
in helping us build our community, please contact
Esther. Her Gmail address is here, and again, it will be on the handout
for ways to volunteer and help us build out this wonderful
community. Here is how to join, and again,
all of this information will be in the handout.
So I encourage you to refer to tha, if you have any questions, one is ready to help
you and sign up for being part of our community.
So now I would like to introduce Adam, who is going to start us
off. Adam? Adam: Good morning or afternoon,
everyone, wherever you may be. It is a pleasure to have the
opportunity to speak with you today about Impact Investing.
I am going to get my slides going here.
So I am the CEO of an organization called Toniic.
Toniic is a leading network of active high net worth
individuals, family office, and the foundation as set owners who
are active in seeking deep impact across their entire
investment portfolio and and in their lives, and my own journey
to this space was initially as an entrepreneur.
I started a couple of companies, and was successfully exited, and
when I first came into wealth myself, I had this sense that there was an opportunity to use
my resources not only to continue to further my own but to address problems, so I became
an active investor individually,
although I was still at that time very easily concerned in a big job in a public company into
which my last startup merged. So it took me a while to make
this into my full-time occupation, but I joined Toniic
about three years ago as CEO, as an opportunity to really expand
all of my working life and panic on — passion on this field of
and pack them messing that has — of Impact Investing that has
the ability to address. So Toniic’s vision is a world in
which all investments honor the
planet and its inhabitants. It is our fervent hope that at
some point in the future, we will not be talking about Impact
Investing but rather just investing.
It would be a hot if someone considering an investment
portfolio would not be considering their values and
what might be achieved by the resources beyond just making
them money, but that is not where we are today.
Today, that is the narrow view rather than the way investing is
done as a default, so we at Toniic aim to change that.
So I am going to spend my time here this morning giving you a
very overview, obviously — very brief overview ,
obviously, because I only have about 20 minutes and talk about
what investing is, and then Eric will show you something very
interesting, which I have seen before in terms of how to think
about Impact Investing portfolio.
In the interest of full disclosure, both Sayuri and Eric
are Toniic members and active once at that, so we — active
ones at that, so we are preaching to the choir a little
bit. Eric: Proud ones as well. Adam: Proud ones. So we will zip
along here and talk briefly about how to think
about what Impact Investing is. What are impact investments?
They are investments made to generate positive, measurable
social and environmental impact alongside a financial return.
And this is the definition developed by the global Impact
Investing network probably 10 years ago, which has helped
pretty steady as a type of lighthouse for our field to
think about what an impact investor is and is not.
Now, one of the places that — so that is clear enough, and
then let the confusion begin, because they’re all
different times — types of terms, sustainable investing,
SEG, SRR I, how do I think about
how these things relate to one another?
I will try to give you at least one simplified view of that
here, which is essentially — what is the difference between
Impact Investing and sustainable investing, investing with an
environmental, social, or governance lens?
And the simple answer to that is the depth of impact, the depth
of impact that active investors are seeking.
So take a look at this drawing here, which is a way to
visualize the different approaches to investing with a mission broader than simply
making more money. So ESG, environmental, social, and governance investing, is
generally concerned with risks that might impact financial
performance in the medium-term. For example, the risk that a
carbon tax would come into effect, in a more developed
world, provides a pretty substantial risk of stranded assets for fossil fuel companies
that are reserves on the balance sheets today will never be able
to be extracted, because it would not be economically viable
to do so. That is obviously an environmental risk, and climate
change and averting it is high on the list of many impact
investors. Yet what is distinctive about
that example is that it will
resolve to financial risks for the also fuel companies that are
involved, so that is an example of an environmental or social
risk that will or may result into a financial impact on an
investment company, not necessarily in the short-term,
but before too long. That was distinct SuperValu
align investment, investment that do align with the
investor’s values, and there is an additional lands on top of
that, that these are best in class companies, but they
conduct their operations with care for all stakeholders, for
customer s, for suppliers,
the communities in which they operate.
For those of you who follow the main stream business press, you
may have noticed this, perhaps two weeks ago, or three now,
that the business Roundtable, which is a quite prestigious gathering or grouping,
big-company CEOs in the United States finally adopted this
stakeholder view of who they serve, so until that time, they
had quite strenuously resisted the thought that they serve
anyone other than their investors, that their goal is
anything other than making as much money as possible for
investors. And now even these mainstream CEOs of the business Roundtable have been rebranded as this
stakeholder model. It is yet distinct from Impact
Investing. And impact investment or one
that makes a direct contribution not only invests in a best in
class company or alliance with the investor’s values but also
seeks to solve a big word problem, and I can be a problem
with the U.N. sustainable development goals, 17 big world problems identified by the
United Nations, with targets reporting specific progress.
Most impact investors can now talk about their Impact
Investing portfolio through the lens of Sustainable Development
Goals, and so that is because these investments are aimed at
solving a big world problem. In addition to being an impact
investment, the investor can articulate change, and by doing
this, we are investing in this particular company.
We expect to have this kind of output and hopefully and how
come that we think — an outcome that we think will be an
improvement to the state of the world.
And finally, an impact investor commits to measured impact in
some way, and not just the negative ones as well, seeking
to pursue positive net impact across each and all of their
impact investments. And I and courage you come if
any of this is confusing or you would like to drill deeper, to
just make a note for yourself. We are going to cruise along
here, and we will have opportunity at the end of the
hour to answer questions. So this question is one that we
hear a lot, which is — is Impact Investing simply making
direct investments in social enterprises?
And the answer to that is no. Impact Investing is a lens
across all asset classes. There are many impact investors , early and classic ones, who
focus very deeply on providing and supporting capital to social
entrepreneurs in the developing world in particular or in
general. But if it solves a big world
problem, if you have a Theory of Change, if you commit to
measuring impact from our point of view, that is an impact
investment and is making a contribution.
So another question that we get commonly is — is all Impact
Investing aiming for below market rate returns?
Is Impact Investing necessarily recessionary investing?
And again, the answer to that question is nope. Actually, Impact Investing
occurs across the spectrum of capital.
So I am showing you here a framework developed by Omidyar Network, and they developed this
framework, which has been widely referenced some of the
continuing capital. So you see on the left
commercial rate returns, then you have some commercial, and on
the far right, grants. And that is because,
particularly for an impact-oriented or philanthropic
Lee-oriented Family Office or foundation, you tend to think
about the entire from commercial to philanthropy grant.
Where we find from an Impact Investing perspective is that
institutional investors are often limited or consider
themselves limited to risk market validated commercial rate
return area of the spectrum, whereas the folks that Toniic
represents, which is individuals, family offices, and
foundations come are often seeking appropriate returns with
a more nuanced view of whether to insist upon market rate
returns in a particular investment or not.
And they are very frequently,
even with a portfolio as a whole, targeted market rate
returns, our members are very frequently making such
commercial investments, in particular investments, in order
to achieve deeper impact, and tend to talk and think about
achieving appropriate returns rather than market rate returns,
because market rate returns have this rather unpleasant feature of externalities, that the
negative costs that are not born directly by the firm are born
instead by society as a whole. And impact investors think about
internalizing those externalities and taking into
account the net impact of their investments, not only the
financial return. And so we have a lot of argument
with folks who say my fiduciary obligation requires that I look
only at market rate are better investments, but we will not dig
into that in the rabbit hole today.
We are going to point out that the broad sweep of private
investors do not typically think of themselves as limited and are
looking across the continuum of capital with respect to capital.
And then just to say obviously
grantmaking is philanthropy, but you can also look at it from the
lens of investing in grant is a 100% investment loss, so while
impact investors are very often themselves also philanthropists,
they see this opportunity to use their tremendous mechanism in
business and capitalism to leverage their resources and
solving big role problems, hence the desire to get a financial
return alongside social or
environmental impact, even if that financial return might be
somewhat less than what is considered market rate for that
particular asset class. So with that introduction, I
talked a little bit about if you are interested in Impact
Investing, how do you get started?
And the answer to that is different for retail
investors and so-called accredited investors.
Accredited investors is a legal definition by the security and
exchange commission in the United States. There is a similar framework in
most other countries in the world that is designed to identify investors who are sufficiently sophisticated to be
trusted to make a determination about the risks inherent in private investments, so as you
probably know, there is a broad distinction between private and
public investments. In public investments are those
that have been validated, the offering has been reviewed by
the Securities and Exchange Commission and the United States
, or the securities of whatever body, the domicile, or the
issuer. And that review process is
designed to ensure protections for investors who might not have
the sophistication or the level of assets necessary to protect
their own interests. The idea is that private
investments, and many impact
investments are private, so they are not listed on the stock
exchange, they do not have the liquidity or even a periodic
liquidity, it might be a very long lockup of a 10 year or
longer period before you can get your money back to the framework
is those sorts of investments are reserved for what is called
an accredited investor, individuals who can bear the
risk or loss, both entire loss or partial loss of investors,
who can understand if their level of their sophistication,
relative trade-offs of risk and return.
So for those investors, there’s additional options than
there are for retail investors feared for retail investor, you
will be limited to publicly listed investments.
in that case, our recommendation is to start with ESG.
Start by choosing funds that have been screen for
environmental and social issues, and that is a great way to
start. The process for both retail
investors and a credited — and accredited investors alike is
one that begins by verifying your values, so we had Toniic do
not tell people what to believe in, but support people to invest
in what aligns with their beliefs. So that is what each person
embarking on the Impact Investing journey needs to
determine for themselves. But there is a starting point,
by picking funds that are screened in a wide way for these
kinds of issues, and that is the way to get started as a retail
investor. Finally, check with is available
in your 401(k), if you have one of those.
The options are not always available to have a screen fund that focuses on risks that
traditional investors view as externalities.
If that is not the case, you can sometimes self direct in your
401(k) and pick your own portfolio or set of tools that
allow you to narrow down the scope of things and not be
making investments that really — that you really do not
believe in or do not take into account the externalities or
risks. For a High Net Worth Individual,
it is a big difference — bit different.
You have the opportunity to find a group, a guide, and advisor,
someone who can help you deploy your capital with this kind of
lens. Again, you still need to clarify
your values, and you would get clear about where you can have
the most impact, where you can really move the needle, or
typically advise those who are just getting started to pick one
asset class and start there, whether that is public equities
or early-stage private investing, is up to you, but the
point is to get started, because it can be overwhelming to try to
transform a traditional portfolio.
The old saw about how you e at
an elephant is one bite at a time, which is pretty
disgusting. We do encourage these days to
consider funds, in the early days of Impact Investing, 10
years ago, it was very common for people to begin by making
one-off direct investments. That is still wonderful and a
ton of fun and a great way to get in but — get engaged with
the Impact Investing space, but that type of investing, making
direct private equity investments in the early stage,
social ventures is really only going to be appropriate for a
relatively small percentage of the total net worth of your
portfolio. There is a learning curve there,
and it is not necessarily the easiest place to start, so
we do not always discourage people, but if you want to
transform, it is probably not going to do that.
But we will add a great deal of expertise and experience for
you, and we will give you a taste of why this approach to
investing is so attractive to a number of people. You see investing as a way that
they can really use their resources for good in the world.
So I am going to stop there for now and turn it over to Eric,
and we will have some opportunities for questions at
the end. Eric: Great. Thanks, Adam.
So I had a bunch of stuff planned, but after hearing Adam
speak, I threw a bunch of the window and started writing
other stuff down. I would like to pick up won —
Impact Investing is not just investing, right?
I once heard someone saying “impact is being present in all
that you do.” You really have time, talent,
and treasure. Those things you have to step
back and say OK, how might either lending, spending, or
giving these things away? What is the effect of you
lending, spending, or giving away your time, talent, for
treasure, so that goes beyond investing to be a conscious
consumer, etc. It is not just money that makes
you an impact investor. It is likely over analogy, if
you have a hammer, everything is a nail. I heard Jed Emerson say if you
had a philanthropic money to give away, everything is not a
charity case. So there is multiple ways you
can use your capital for good in this world, from being a
consumer, the lending it to responsible institutions, to
helping family out in building social enterprises, and the list
goes on. Those are thoughts that occurred
after listening to you, Adam, we have been on this journey through membership networks like
Toniic, which has really become a computer the — a community.
I cochair a family foundation with my wife, Steph Cordes.
The foundation is called the Cordes Foundation.
It was founded by her parents, and we are members of Toniic, and I think we are the
first married couple to come out of the Toniic membership.
We look at it as a peer-to-peer lending group, how are you doing
this, we have concerns, and we are talking about some really
private things here, can we trust you to really want to keep
our confidentiality, and really be direct with us.
Tell us what you have learned in your journey, what are some
bumps we have learned in making to impacts with the assets that
we have? Today, we do a couple of things.
My wife works with a fashion firm and helping grow that.
I also work with a firm called Align Impact, which is working with about 30 families and their
Impact Investing journeys and their implementation.
I would like to say with all of the things we do with Align, we
are woken to spoke. How do you create a foundation around that?
How do you dive deep into the issues we care about as a family
and they create a bespoke portfolio across asset classes
that took in the consideration, that took in the principles of
risk in return, but it is not just those two things, we have
to look at return as well, so risk, return, in are things we
look at, in addition to other risks and exposures I will show
you, liquidity, geographical, those kinds of things.
Let me share my screen here, and we will dive into our portfolio,
and please feel free to ask any questions. The Q&A is open.
I have it open on my computer. If I do not answer, it is
because it is too hard, and I will share it with Adam. OK, share screen.
Hey, Adam, can you see my screen? Can you nod?
I see you on video there. Very good.
Let me refresh the page. This is a dashboard you might
see in many traditional investment portfolios, and that
is because we really look at as that second word implies, —
we look really look at Impact Investing as the second word
implies, investing, an important part of the wealth management
process. What we are looking for here,
and let me highlight a couple of things, this is our folio as of
— portfolio as of 12/31. At a high level, you might think
of these things as you think about the riskiness of your
portfolio. Is the investment type.
Right now, you can see we are about 60% equity and 40% in
fixed income. This I would say is a moderately
risky portfolio. If you wanted to be even more
risky, you would likely see 70% equity, 80% equity, and this is
across public and private. Then you start to get into, and our portfolio, how much do we
want to be in the public markets vs. how much in the privates,
which is depicted here, and this color coordinates with the
colors over here in terms of public/private.
If this was a real Q&A where you could respond, I would ask the
folks participating, you know, what determines how much in the
public versus how much into private you would want to put
your assets? And for us, it comes up of how
much liquidity do you need in your portfolio?
As a foundation, we do not have a ton of liquidity needs.
Now, we also want to be in the private markets, more so because
we feel that is much more direct impact. Adam touched on ESG vs . SRI,
value alignment, and impact investment.
We view the private market really is direct impact and we
view the public market as collective impact.
Our dollars are not going to make a huge dent in the $80
trillion of publicly traded securities around the world, but
if we were to invest with like-minded investors, those
that we meet through Toniic, managers who have rigorous ESG screens in their portfolios,
then we could have collected impact, because we are all
working toward the same thing. So let’s start with our public
portfolio. If you click on this, you will
see the liquidity over here is typically daily, because they
are publicly traded securities. You will see that it is
predominantly in Public equity as well as public debt, and then
we have some stuff in cash, which is the red there.
Obviously you need cash as things come in and out of your
account. And then if we look at the
impact of these things, folks may have heard of many industry
classifications of how you can quantify impact.
At a high level, we like to look at the SVG classifications and
the IMP classifications. SDG is Sustainable Development
Goals, and IMP is the impact management project, which is
fairly new compared to the SDG. End and things like the IFC, B lab has their gears ratings.
I would step back and say how did we make these specific
things to focus on, and this is advice I would give to any
investor, something we get from the Toniic member, is to focus
on things you understand. People will come to me and say
hey, we have this great text form, here you go.
That other one has 10 components, this one has 12, and
we could not tell yo why those two components are better than
the one with just 10, so we are not tech investors, but we do
know the impact and a fashion space, so we tend to focus on
economic perspective of women globally, which you see that,
goal 5, as well as goal 8 under the SDG classification, within ethical fashion.
And that is because my wife came into the fashion industry.
Or mother was very focused on issues pertaining to women and
girls throughout her entire life, and her father founded a
financial services firm, which he sold in 2006, so it really
brought the whole family to impact things together under
this portfolio. If we were up to look into, on
the left side, these different managers, these types of
managers all have some type of agenda lens screen to that
investment strategy, something like a Breckenridge, which is in
the public debt market, as a gender lens screen as well.
If we look at Boston Common, we were intrigued, because just be
on the screen, it was a female-run strategy with a
female at the helm of Boston CommonD.
Going back — Boston Common. Going back to the various ways
you can look at impact within one investment.
I would say we are on a journey
to be 100% all in on impact. Beneficial state bank we think
is an impactful institution. These very last two, Fidelity
market money treasury, could we honestly say that is impactful?
It is tough. It is tough, bright?
You need that cash to sweep in the different investments, and
only the larger institutions have the ability, as well as
the, I guess you could say the connections to the other
managers we are with to use that cash.
So I would say it is not super impactful, but it is collective
impact on the public market. If we were to dive into the
public markets, this is what gets me going. I started private equity at a
firm called Hamilton Lane. I feel like we do a lot of the investing in house, and we look
to invest in things beyond the dollar, to say , how can we help
your company grow and be as successful?
And just like anything, success is not linear.
A lot of folks will say hey, you know, we want to see more
women representation in your supply chain, which is something
we typically say. We have invested in companies
where the supply chain included about 70% to 80% women, but then
as the company grew, to their credit, to become more
successful, they started making more complex pieces, the
percentage of women in the supply chain ended up
decreasing, although the overall supply chain is increased.
So we would like to say that profits can be a proxy to
impact, as long as the impact is directly correlated with those
profits, but in this case, it was negatively correlated, so it
is kind of going up, but I decreasing rates.
So we had to step back and say OK, how do we think about that?
We think overall, it was a good thing, and the company made a
commitment to train more the funeral artisans in the African
country it was doing business in to do more of the complex —
female artisans in the African country it was doing business
with to do more because>>pieces. — more complex pieces. I am not sure how it will
actually happen, because impact is so personal.
I can look at this portfolio and say, “wow, it is so personal to
me, how does it resonate with you?”
But if you are an environmental focused investor, you might say
this is really focused on the S type of investing.
I will step back to the high level of the portfolio.
And just go over things briefly, so we are about half in the
public market, half in the private.
We probably have a bit too much liquidity, because we do not
have too many liquidity needs, so we can put more the private
markets over time. You can see our asset class
wheel is broadly diversified, public equities, direct equity,
private debt, and public debt. The IMP classification tends to
be on this c4, widget folks are not — which if folks are not
familiar with the eye of the classification, c4 is right
here, private investments for underserved people.
Typically, our portfolio from duration with this C4 tends to
be where we have a lot of assets. That is our website.
As you can see, we are broadly diversified around the worl.
We have a largest closure in North America because of the
publicly traded assets. Financials, because that is the
sector we understand. But again, stepping back to
being traditional investors, we are very focused on broad
diversification, because of the risk protection.
If something happens in one part of the world, this portfolio
touches approximately 70 countries, so we are kind of
held up by economies that are doing well elsewhere.
And that is both developing and emerging economies.
OK, I will stop talking, and what I want to say is all of
these companies that are here in our portfolios come about 30
active ones, if you go to our website, Co rdesfoundation.org,
see the types of funds, check out the websites if you want to,
and if you are interested in checking out the
philanthropy we do as well, that is another page where you can
check out our grantee partners, and we have bucketed them into
these sectors. To let me look at some of these
questions, and may become Adam, we contacting these questions
together, if you would like. Adam: All right.
We will stop sharing, and we will follow your lead. Sayuri: all right.
Thank you so much, Eric and Adam.
Eric, are you sure you did not go to MIT?
All of the analysis that you have done. Eric: I tried.
I do not think I got in. Sayuri: [laughs] It is so helpful how you build
your overall impact in between the asset classes.
Let me just say that I am aspiring to be Eric.
So let’s take questions, one at a time, that has come in.
The first question is — do impact enterprises that target
firms of impact investors tend to be certified or smaller, transparent, accountability
models? May be, Adam, you can take this
one. Adam: I think Adam will have
a view on this, too. My answer is probably yes,
though not specifically. We are fans of B labs and the assessment that they do is very
broad and thorough investigation of the enterprise.
Companies that have allied themselves against the standard
standout for impact investors. On the other hand, not every
investment that I make or that impact investors make will be
into a B Cor ps. or somebody that
has such a certification. There are many competing
standards, but the commitment to transparency, and, frankly, the
amount of work that it takes to go through the B Labs assessment
is a real indicator for an investor, that this is an
enterprise that takes that level of accountability seriously.
So, Eric, do you have anything you want to add? Eric: Yes, I would say I love
the B Lab certification as well cared when you sign up to be a B
Corps., you say I am committing
to measure that impact, and I will report back on it, and
there is a gear scored with your company in particular.
Now, there were like 100 plus companies who said it is not
just about profits recently. At the business Roundtable, they
said it is not just about shareholders, it is about
stakeholders, and what I would like to see, and the lab has
said is, how do we hold them accountable?
They could become B Corps. They have expressed and 10, and now I would like to see
commitment to measure, and that happened as a requirement of the
court — B Corps. I would copy yet, as a small
social in a press, becoming a be Corp. costs a few thousand
dollars to go through the B Lab certification process, do not
hold it against them if they are trying to say OK, we are going
to make payroll, are we going to
become a be Corp. — B Corps.? I just wanted to put that copy
you in there. Sayuri: Let’s go to the next
question. The finest front I talk to, the
ones who are involved in daily trading, basically rolled
her eyes when I mentioned my interest in impact investment.
I am surprised by this. Can you talk about how to
articulate the importance of this?
Is this the future of investing? I think so, but they, who are
more professional than I am in the investing world, do not seem
to. Adam: We love this kind of question, don’t we, Adam?
Eric: Levitate a small popcorn over to Adam, but I would say 75
years ago, publicly traded companies were not required to
disclose their profits. They viewed it as a private
corporation. They viewed it as proprietary
material meaning if an investor how this information, it would
affect the way they thought about the value of their company.
Today, you cannot think of investing, I cannot think of
investing in a company without understanding this product.
I think Impact Investing is just extra data that we are now
increasingly having access for, and it is basically putting it
into their models and I think them rolling their eyes is them
rolling their eyes is the not clearly understanding that the
data is becoming more and more available, and that may be
understanding how to fit it into the models.
So I think — and I think it is 50 plus or 100 us bills in
Congress today talking about environmental protections and
things that have to do with ESG . And I think you have a lot of demand for this data, and I
think it is only a matter of time where companies are going
to have to disclose these data points, and your friends or
point to put these data points into their analysis and make
better investment decisions. Adam: Great answer.
I will just add a couple of points.
One is that people are very stuck in their groups, and so this is not just investing but
life, right? People get into a pattern, and
one of the patterns of thinking in the modern day is the only
thing that matters for investment is how much money you
make and how much risk you are taking and how much liquidity,
right? Everything else just does not
matter. If you start from that world
view, than they are quite quickly dismiss impact investing
as incorporating a bunch of irrelevant subjects, but those
who are perhaps not financial professionals can recognize, financial professiona ls have not
always steered us so well as a society, and the focus on
short-term is him, the financial earnings report, the
giant problems that are leaning down on the earth, with many of
of us beli we not only
have a responsibility but a great opportunity to address is
sort of beyond the shame. I think the first thing is that
it is a habit of thinking, and it is also tied a little bit to
this myth that I alluded to when I said all Impact Investing
is concessionary, and that may be leading to the eye rolling,
this habit of thinking, you should make as much money as you
can come of any will have more to give away, even if the money
you are making is causing more harm than the good you are doing
with your philanthropy or whatever. I view the eye rolling as people
who are stuck in the old paradigm and have not recognized
what is happening more broadly. Very quickly, the “financial
Times” has recently started a project called Moral Money. Many financial publications and
other observers of this space see the trend toward at least
sustainable investing broadly as one that is gaining a lot of
steam, so financial professionals ignoring that
trend are doing so at their peril. Sayuri: Great, thank you.
The next question, When you refer to a journey 100% impact,
how do you rank non financial assets — real estate, namely?
Would you exclude or search for impact related assets as well?
Who wants to take this? Adam: I am not sure I understand
the last — Sayuri: I think the questioner
may be thinking that for impact investment is — it does not
include all asset classes, including real estate and
others. Adam: OK, so in generally it does.
We think about the investment portfolio, so for example, your
personal home would not be included in your investment
portfolio, because it is not
typically looked at that way, so we would not ask you to classify
that as impactful, but basically all discretionary investments or assets that are held with the
primary purpose of return are included in the scope, and, thus
, as we have seen, or I guess as we have alluded to — we have
not gotten very deep today — there are strategies for
investing with an impact lens that every single asset class
that an advisor with Align Impact would got a client
through. So it is — guide a client
through. So it is remote across all
assets. Sayuri: Eric, do you want to add
something? Eric: I would add that it goes back to the time, talent, and
treasure, right? Being present in your decision-making, so if you’re
going to buy a new house, you may look at the carbon
footprint. You may look at clean energy. And if you are a real estate
investor, looking at a bunch of different properties, commercial
and residential, then, yes, I
think you look at it as a piece of that portfolio that is maybe
uncorrelated traditionally to the publicly traded stock
market. So, yeah. Sayuri: OK, next question.
Is there a widely recognised way to measure the impact of an
investment? Eric, do you want to take that
first? Eric: Sure, sure, sure. Some that we mentioned today,
the IMP, which I see it we had someone from Impact Management
Project on this call, which is great.
I would say B Corps. and the gears ratings is pretty
prevalent today, but not as wid e as we would like to see it.
The global Impact Investing network has something that they
call the iris metric that they continue to revamp.
I think we are on version 5.0. Those are, like, 400.
The IFC came out with their spirit and a joint what used to
be called the United Nations PRI — principles reporting impact?
Adam: responsible investing. Eric: So that is like a V Corps,
where you pay a certain amount of money, and you commit to
measuring and reporting on your impact.
So I would say the IMP, IFC, PRI, Gears and B Lab, and the
iris metrics, those are like six different ones.
And then the SVG’s are really
like a classification venue you can bucket them into things. I think it is great to have wide
standardization, because I love the saying data does not measure
progress, it inspires it, and if your data can inspire others to
move in this direction, that is great.
But as investor, those metrics are only as good as it is fires
you to try to make decisions differently or do more of this
type of work. Maybe that is a long way of
saying there’s a couple of really great frameworks, a lot
of people are using a lot of and like any industry, it has been
hopefully consolidated to, hey, here is the standard.
Sayuri: Adam, do you have anything to at on that?
Adam: no, great answer. Sayuri: All right, so the next
one. What about the folks who say
that there are issues with many of the sustainable organizations
, that they are not as effective as they are claiming?
How do I make sure that the orgs I invest in are really, really
doing good? [LAUGHTER] Sayuri: Who wants it?
Eric: Why don’t you go ahead, Adam. This is a fun one.
Adam: When I would say in response to this is thank you
for thinking about in that way, right?
Because we are not yet at a stage, as Eric described, there
are many different ways to measure impact.
We do not have the result impact down to a single statement, like
we see with generally accepted
accounting principles, or IFRS, outside of the United States,
but that too perhaps 100 years, and the impact investing, the
sustainable investing industry more broadly as much younger
than that, so we’re really at the birth of the development of processes and methods for
determining the overall impact of an enterprise.
And, you know, the tipping thing is to write an impact report if
you are measuring your impact, to write one that really
highlights your successes and to sort of cherry pick and not pay
a lot of attention with the things that did not work out as
planned, not to mention the negative impacts.
And so I would say, candidly, that the field is still in the
early days of being able to help you answer that question, how do
I know the organization I am investing in is really, really
doing good? I think that problem is —
scales with the size of the organization.
So assessing a relatively small enterprises a much simpler
affair than assessing the overall impact of a global corporation appeared in as we
have said, these type of investments are across all asset
classes, so we need a way to do that across all, public and
private and so forth. We are not there yet, but that
is not a reason to try nor a
reason — so I encourage people to use various tools.
Over the coming years, we will see increasing decisions and the
ability to answer that question. Sayuri: OK, I think we are going
to — Eric, do you have something sure to add?
Eric: Yeah, I would just as it there are issues with all
organizations, whether they are impacts or not, and
traditionally, you have these auditing firms that can say,
hey, this is correct. We do not see that on the impact
site yet. KPMG does a little bit.
But we believe that some of these companies are
directionally correct, but that is the best we can do so far in
terms of impact, management. But I would not look at it as sustainable organizations that
are not as effective as they are claiming, that could be said
about any company claiming to be good at anything, so it is just
doing your homework and making good choices. Sayuri: Great!
Thank you so much, Eric and Adam, and I am proud to say that
I hang out with these guys. These guys are my tribe in Impact Investing, and I have
been in Toniic for a year and a half, and I have gone through
such learning , and it brought in
my scope of Impact Investing. So what I would like to
encourage, and it is not for everyone to joined Toniic,
but let’s create a tribe around the MIT, and again, the
invitation is not just for people that went there but using
in my tea as a — MIT as a forum to develop our community.
There are certainly less social entrepreneurs coming out of MIT,
I would say, four out of seven of my pre-see d investments are
affiliated with M.I.T., and that was not totally on purpose.
Again, thank you, everybody, for participating, and please look
into joining SEAG, LinkedIn, or the MIT alumni club network connection, and we will see you
again soon. And again, Eric and Adam, you
guys are wonderful and so special.>>Thanks for joining us. And for more information on how
to connect with the MIT Alumni Association, please
visit our website.