 Yes, so welcome and thank you all for joining us today for a discussion on the state of the field of impact investing I'm Fran Siegel and I serve as executive director of the US impact investing alliance Which is a nonprofit organization with a mission to build the field and practice of impact investing And I'm wondering Kathy if you could introduce yourself next and then Monique sure my name is Kathy Clark I am faculty director for case the Center for the Advancement of Social Entrepreneurship, which is a research and Education Center based at Duke University. We focus on preparing leaders and organizations with business skills required to achieve long lasting social and environmental change Monique I'm Monique Egan. I'm VP of programs at Mission Investors Exchange a network organization for Foundations and others in the impact investing ecosystem seeking to deepen their practice of impact investing And I am also a contributing editor at impact alpha Thanks Monique. I now I hear your voice on the brief Here Monique talk about the state of the field So next we'd like to get a feel for who you all are in the audience so Um, could you switch to the chat box and share a little bit about who you are? But and specifically the types of topics you'd be interested in hearing about so rather than doing audience questions at the end we Like to understand what you'd like us to address and where you're has that what you're thinking about now so that we can Incorporate your ideas in so if you could do that now, and I know that Kathy and Monique will be taking a look at the At your comments and in the meantime, I'm just going to offer a few framing remarks So Kathy and I have been doing the state of the field session for Kathy I think it's eight years if I'm not mistaken But today's session will be a little bit different than it has been in the past So this year of course has been unprecedented been challenging difficult for all of us around the world But it's also given us an opportunity to rethink what we're committed to How we're addressing essential challenges and even the language we use to talk about our work So in that spirit Kathy Monique and I reexamined the session and decided it was important to center the discussion within some of the larger societal conversations that are in the public discourse at this time including those around the health crisis the already uneven economic recovery Rising acknowledgment and protests around systemic racism climate change in the future of capitalism In previous years Kathy and I have used a session to examine growth drivers of the field of the impact investing market and to talk about emerging trends products funds and Needs from the supply demand and intermediation perspectives We will still touch on these important elements for example I know that most of you probably follow the the global impact investing network the gin Which does an annual report on the size of the field? The most recent report came out this summer and they size the impact investing market at 715 billion up from 500 billion worth noting that there is some ESG investing public markets investing in there But it's it's it tends to be more of the deep impact investing But given the confluence of crises that we're facing today We really want to go beyond market sizing and market trends to consider how impact investing factors into broader systems change As we emerge from this pandemic We believe that impact investing has a critical role to play in reimagining systems and promoting better accountability So I'll pass it to Kathy and then Monique and maybe you can share what you learned about Our audience from the chat and then we can turn to the discussion Sure, I'm gonna just pick out a few questions that people have asked and Monique maybe you can still scan as they're coming in But one of the questions I loved was how do we secure authenticity for the field? Which is something we definitely want to talk about. Thank you Phil for that one Another one was from Brian at tide line. Hi, Brian was how do you compare? Like, you know, we do this kind of annual. What are the trends this year? And he's asking us to also look back like compared to five years ago or Fran when you and I started doing this eight years ago Right, what are the big trends? And that's a really interesting one and I'd love to talk about that I actually had that experience recently I was in a conference call with someone I haven't worked with in 10 years I haven't actually seen and she said what's changed and I was Kind of radical how much it has and then another one I would mention was, you know, what does it take to radically boost this field, right? From this point on I think that's a good one. Monique, are there any that you would pull out? Yeah, I think there's an important part from Lindsay. Oh, hello Lindsay What's not moving fast enough? So I think that certainly there's been some interesting responses and we can sort of bifurcate the world as Darren Walker says and post COVID pre COVID and Now and there are certainly some things that have heated up in the last that's called six to eight months But I think the scale and the changes that we require Are just enormous and perhaps there are a number of things that have been incubated by the field that just need You know that acceleration in order to really deliver on these really This unique moment unprecedented as people always say not to be cliche, but it truly is And I think we can touch on that a little bit as we go And I saw the Tim Freund like Fact-checked me and said that it's actually eight years So we're dating ourselves Let's say Ruth Schaber said what is the current evidence to prove that impact investing doesn't have to be concessionary These are all great great questions. How much time do you guys have? Okay, so I think that we will keep them coming and We will Try to do our best to address these great questions in the context of our discussion so With with that framing in mind and the input from folks who have joined us today I'd love to pose the first topic to Kathy and Monique or Monique and Kathy whatever Whatever order you'd like to go in so from your perspectives What are impact investors doing differently in response to the crisis set that I talked about a moment ago And what have you observed over the past year? So I'll get started and certainly Kathy can chime in Some of the things that I've been observing just in my time at impact alpha. They cover, you know deals from the You know direct investing side of things and we've seen I think a trend towards the back to basics in some ways Metal hierarchy basic needs but with a twist pumped up by innovation either in the tech-enabled way that delivering the service or goods We're in Alternative everything world these days all protein all farming mechanisms Out energy both access and delivery because we need to be more creative and to connect people to In our tech-enabled world and certainly there's a barrier in many places to even just connectivity and energy And folks who are coming up with interesting solutions to those things are the ones who seem to be getting funded on the direct investing side of things I'll just throw throughout this conversation some links in the chat to some of the articles that we're talking about and where the places that we've Like garnered our information from just to make it more interesting for folks speaking people can follow the stories themselves and and see what they want to see in terms of What is it telling them also about where the world is? so on the esg side of things certainly we've seen an influx of capital on the public markets and unprecedented flows of capital and One of the reasons that are often cited by some of those analysts who are covering such topics Is that people are now approximate in weight in ways to the environmental challenges? And that is changing behavior Not only the wildfires burning all over the globe Um other kinds of ways that climate change is showing up in people's lives directly severe storms and The fallout from those things as well as our own mortality Everyone is close to death as a result of clopid in ways that people Largely weren't before and privileged protected that fun. So kovat is on our thing some Visceral reactions and also of course the failures and fissures in our systems That many have been working on but it is now more apparent to all in ways That it never has before and finally the global affordable housing crisis has come to the fore You know we we see a looming challenge here in the united states as a result of economic headwinds that have been multiplied by the pandemic and certainly around the rest of the world that has always been you know a concern and There are some folks doing stuff about it as we can see these these social entrepreneurs are getting funded to do some interesting things and there's one pair of black CEOs Victor mcfarlane from mcfarlane partners and Darryl carter from avaneth capital who have joined forces to issue a hundred million dollar publicly traded reed to do something about it So we're seeing some green shoots despite all of these challenges that we see and then of course racial equity and Someone mentioned in the chat like how is that changing the way that we're doing business and You know, we can certainly see there's some responsiveness to systemic pressures in ways that are unique as well as understanding Who needs to retool and what in this post-covid world and how can they do so? So rbc and mie have been curating some stories around retooling in an effort to understand What does it take in order to deliver on faster pivots because the systems change that we know will continue to come will require that of business leaders and So some of the stories we're trying to understand what has worked or hasn't so that we can hopefully inoculate others and build resilience into that community So i'll pause there and see what capi has to share Thanks money. This is a really great start Um, I wanted to talk a little bit about you often when fran and I have framed this in the past We talked about kind of supply side and demand side and we both work on both But she often pushes me to talk about a little bit about what is going on on the enterprise side um And I did want to say, you know, this has been uh, kind of a earth shaking here for enterprises Um social enterprises nonprofit for profit, you know, big small all the way up to corporates But the the social entrepreneur Community, you know, which is widely recognized, especially the nonprofit social entrepreneurs, which many of us work with very closely You know, they're really the first responders. They're they're they're on the ground working with communities of need and when covet hit, um, they They were more fragile and and and were able to you know, all of the accountability mechanisms that we think of as part of impact investing Um, actually reside in what entrepreneurs can do to understand their stakeholders, right? And so they went on overdrive In terms of trying to figure out what to do quickly with their stakeholders And then trying to figure out how to act about that and then get the message up the chain So I just think this has been a really interesting microcosm And I feel like covet in so many ways has like ripped the blankets off of many things And this is another thing that it's you know, kind of ripped the veil off of We did two things this year that were significant one I I got a little be in my bonnet about enterprises failing both social and not and Created a website back in March. Um, it was actually after a conversation I had with fran fran. It's all your fault And we created a website called covet cap.com which was just basically trying to put the information that soak up and next billion and Guide star and many others are candid We're all putting together but putting it into a searchable database and we ended up amassing over several months over a trillion dollars of resources for Entrepreneurs around the world and we had about 40,000 of them visit our site and use it To to find capital which is amazing The reason we were we were so successful in getting the word out is because we also partnered with a group that came out of the Weft Which created a covet 19 rapid response alliance specifically around social entrepreneurs and this role of these guys as first responders and I just wanted to Remind you of some of the things that that group has learned the the alliance is continuing Through the year which I think is important because I think we are you know Heading towards a second wave and some in some in some areas of the globe And the information is different. So I wanted to give you two examples And I'm not like monique. I can't talk and post at the same time I don't know how you do that But the you know one example is 60 decibels which is doing has been doing an amazing job At assembling data from the enterprises that it works with they actually have a covet 19 dashboard And so you can get a sense of you know, who's worried about their health who's feeling financially vulnerable And I'll just give you one Stat that I pulled off the site yesterday. There's a high percentage of I think customers of impact enterprises reporting who are feel reporting that they feel highly vulnerable still today And about 25 of those when they said what is Causing your feeling of vulnerability. It was I'm not sure I'm going to have enough food so That back to basics theme that many started with we now can aggregate the evidence of that and You know start to understand that was in three countries. That was in rwanda serial Sierra Leone and kenya another Group has been doing an amazing amount of work in this that's part of the alliance is the andy network In april they did a survey And they found that almost 42 of the small and growing businesses Indicated being at risk of failure by june 12 of those have already failed And 37 percent were still at high risk of failure, right? So we're seeing this layer Of fragility about the people meeting the needs of the the highest The highest need clients and I think that you know coming back up to impact investing You know, what does that mean? What it's mostly managed in the first six months and that's what we put on our site finance had to simplify, right? So it was Grants Interest-free loans right as much money as you could push out the door with as few strings as possible And that's why we created the site. I was going to create an impact focus site And I quickly realized people aren't putting impact strings on any of this So let's get rid of that and let's talk about what people need that Mental health supports, you know, all the kind of things to get you through. How do I how do I manage immediately? um, we also did a series at case, uh called Scaling through mass disruption which interviewed entrepreneurs around the world about how they were actually dealing with The first six months and I'll post a link to that when I'm when I'm done talking Um, now what we see is the entrepreneurs need something else. They need Strategic pivoting support. They need soft loans. I was really glad to see in the other sessions at SoCAP that there's more attention now to recoverable grants Variable repayment loans all of the alternative financing instruments that we've been Collecting and promoting around the world, you know through our through our training online training and other things Are exactly the right tool for the job at the moment and so to to have more and more investors realize the flexible capital instruments Are extremely important To investors and then I think the other trend that we were seeing through the alliance And I'm interested in in others opinions of is that You know, there's when you look across the whole field of the whole marketplace of impact investing We're all really happy to see the esg numbers are rising right esg is outperforming and so You know something like 40 of the portfolios at goldman John Goldstein said the other day are now integrating ESG into what they are doing. I mean the the numbers are going Or they're they're wildly increasing, but I don't see the same thing happening Down the pipeline to the point where the entrepreneurs are getting the funding and so I think ovid has shown us You know the supply of capital There's a tremendous amount of it at the top and the public market You know gives a small piece of that to the private market and then the private market gives You know tries to work with entrepreneurs What have we learned about that pipeline? Because during covet we needed to drip that money through faster Um, and I'd love to actually come back to money and fran to talk a little bit more about How well did that work in the u.s. The government was very active Uh with the ppp and a lot of the impact investment community stepped in to try to make that happen Um, what did we learn? Yep, thank you. Thank you both. Um, I think we're going to shift a little bit to Monique and I speaking a bit about field building at this time, but I'll directly answer Kathy's question about the ppp And policy in general In in my remarks. So monique, maybe I'll kick it off and then I'll hand it to you So as some of you may know the us impact investing alliance does a lot of work on public policy Could be anything from fiduciary duty to shareholder rights To the cdf i fund new markets tax credits Opportunity zones a kind of a full range on public markets private markets community investing esg and um one one thing I wanted to share with this group and it's really more of a call to action is that We believe at the alliance that within our ecosystem. We need to do better at serving as advocates and policy conversations um the organization that the The field has almost had a kind of under recognition of the importance of public policy and the role the public policy plays In allowing impact capital to flow There's been Again this predisposition toward, you know, the government should step aside And then that we know how to solve these issues But what we've seen time and time again is that impact investors to do our work effectively we need in enabling public policy environment And the events of this year, you know building on what kathy just said is really driven home this point. So for example COVID-19 as you folks know if I profound effects on local economies Which makes this moment also a small business crisis So various federal programs administered through the small business administration like the paycheck protection program the ppp like kathy mentioned Failed to reach the small businesses that need the capital most and it's important to remember that the ppp was designed for small businesses but largely was administered through the largest banks and we know that Entrepreneurs of color women entrepreneurs Often don't have those income of banking relationships. It didn't have access to the ppp resources lifeline cdfi's and minority Depository institutions mdi's which you've heard quite a bit about on the main stage earlier today Have the infrastructure in place to reach black and brown small business owners in underbank neighborhoods But they really struggle to access the ppp for their clients So just to put a fine point on it and kathy talked a little bit about small business failure The new york fed did a study That showed between february and april 41 percent of black owned businesses across the country shut down 32 percent of latino businesses 26 percent of asian businesses, but only 17 percent of white businesses were shuttered so these gaps in um Core small business infrastructure are really sowing the seeds of an already uneven recovery We have another uneven recovery. We've had lots of uneven recoveries that further exacerbate income inequality wealth inequality um Another element of the public policy backdrop that's often taken for granted is regulatory mechanisms to promote accountability in the capital markets uh Kathy and monique both talked about the the rise of esg the flowing of capital into the public markets for esg This year, uh, but wanted to point out that um In the last few months alone the alliance and many in our field pushed back against significant backsliding From the department of labor and the scc on core impact investing principles so for example The department of labor proposed two rules in rapid succession that discouraged the selection of esg funds and certain pension Plans namely corporate pension plans are called a rissa regulated pension pension plans And also clawback previous guidance clarifying that esg aligns with fiduciary duty And both the department of labor and the scc have sought to strip away basic shareholder engagement rights so as we see the rise of esg investing from the market the market speaks we have um in the waning months of the of the trump's presidential term we see a real backsliding Each of these regulatory moves have drastic far-reaching implications for our field Thousands and there were thousands of public comments pushing back on these proposals. So that was heartening to see So this needs to be the norm going forward for the sake and integrity of impact investing of esg that We as impact investors must serve as advocates for the communities and the issues that we care about in broader public policy So that is my kind of pitch for public policy In the context of impact investing field building and monique, I know you have thoughts on the topic too Yeah, I was just going to add to that that in the u.s. Context and specific which we kind of referring to to respond to Certainly the racial reckoning that's underway You know after the murder of george florid and the global protests that it inspired Really are about accountability in some ways. How are people holding leaders and each other Feet to the fire around these topics that are so important to everyone You don't leave your house in the middle of the pandemic because it doesn't matter to you and so, you know around the world we're fighting back against tyranny in many ways and and You know ensuring that our policies are not just further exacerbating Of the situation that folks have been suffering under And we've seen some people respond to that moment with pledges and all the things like that you know racial equity pledges and Investing racial justice pledges and all these other things, but I think you know as we go forward What does it mean for them to actually live into those pledges? We need to wait and see But I think there are some other efforts that are happening To get more specific not just a broad frame. I'd like to do some good things But people are getting tactical in these days You know, there's an interesting development happening around the topic of qualified immunity, which is a policy And of course that leads to police brutality in specific ways that really disproportionately affect black and brown people in this country And so, you know, we've been working on the symptoms We've been funding solutions to the symptoms But the disease remains because policy is what needs to be dismantled As we talk about systems change and other things like that We need to get into the structural And systemic level policies that enable those poor decisions that force us into choices that maybe give us less than Less than perfect Responses because the outcomes that we seek are really need to be dealt with from policy perspective Effort being led by ben and jerry and the ceo Sorry the ceo virgin unite and in partnership with policy league ceo michael maccaffy Literally is trying to get very tactical with You know, how does congress Work on qualified immunity as one of a main Effort to You know make the world a better place for black and brown people and responding to systemic racism We've also just have now some quantification around systemic racism And though black and indigenous and people of color's lives have felt it city banks research on the cost of racism since 2000 was I think really An important milestone to have data talking about 16 trillion dollars of the cost of racism in america 5 million the 5 trillion Dollars will be added to the usgdp over the next five years if we were to do this What is it going to take and I think it's really important for us to recognize that these are choices that we're making These are policies. We have some tools already our disposal someone talked about cdfi's How do we scale up the solutions that we already have out there and do something with the tools already at our disposal? There have been folks working on blueprints and roadmaps and other things Long before this moment, but how do we listen and I think How do we get the right capital to echo Kathy to the right participants? How do we think about job creation and wealth and quality and all these other things? There are folks who've been doing it. So we just need to listen and surface the solutions that have been bubbling up And socialize them better. I think I really commit to taking action mission investment exchange has been Curating some resources related to racial equity for those who are newer to that conversation There's a lot of information there to help folks get started cell pods there on in terms of you know, what's happening in the united states and Really, I think you know, how do we ensure the durable change? Someone asks earlier. It's the accountability question. So I think that I'll pass it to Kathy to Sorry to the conversation pick it up on accountability. I just wanted to say thank you for many for for You know, giving us the broad swath of you know, what are the you know, how do we talk economically? um about what we all morally No needs to change and and you know try to to bring more people on this I just wanted to tap on to what you're saying Which kind of leads to the accountability topic, which is I've been I've been approached by several um, I won't name them but groups of membership groups of pension funds who are basically saying we must nail this racial equity issue Um, and so you have you know the biggest supply side players and they just have no idea where to start Right. And so realizing that you know, it comes down to metrics that you know, what can they actually ask for Well, it depends what people are actually doing down the chain So it actually goes to accountability, which is our next topic But I just want to say I love the fact that and Avery had this great comment about you know There's demand now, right that there was a there was a backlash against what some of the regulatory Choices were that that fran has been so heartily fighting against But there's a backlash among the financial services providers saying this is absolutely not what our clients want right now um, you know We have evidence saying that this stuff outperforms and the clients are going to follow that and how dare you try to tire Doing that that seems irresponsible But this demand this this idea that kogan has created different kinds of demands from different people And that you know when you are going to try to integrate, you know What you have to end up with is kind of what do I Count what do I what what can I what can I report on what can I pass? What can I learn and then what can I pass on and so I think we're going to turn to this issue of Accountability, which we talked about at the front end with one of the questions We talked a little bit about you know the backsliding of accountability by federal agencies You know from where I sit, you know, I think one of the most significant Um changes in the Marketplace this year is that we have started to see You know by the good work of many many people we know have been working on this for a very long time An emerging set of standards principles And so on that are that are starting to be adopted, you know from things like the ifc principles which hit over 100 signatories in june The sdg impact standards which now exist for private equity bonds that are coming out on enterprises shortly Tiedline launched blue mark to start to verify those standards as a third party I am certain the other accounting firms are going to jump in Soon and they actually announced last month a world economic forum event a set of common metrics that they wanted to audit for esg um So I think like i'm going to turn to monique and fran to talk about this but in you know The framing I see is I think the challenge now is how do you make this easy? How do you make this interconnected and widespread? It's like if you're the only person that has a fax machine. It's useless, right? So unless there's a standard that speaks across the chain That makes people help people make better decisions whether it's this pension fund trying to decide how to support racial racial equity or someone else trying to support an sdg Or something else, you know, how do we make sure that we're not just writing more reports that we're actually making better decisions About what impact is actually happening and where and where money can flow So I guess a specific question For both you and fran both fran and monique is can you speak a little bit about the importance of accountability for our field? Um and the broader capital markets in light of this year And do you think we're getting this right and how will we know? Monique do you mind if I jump in first just to offer some high level comments and and then hop to you Um, so yes, this issue of accountability um Is so important and we've worked So long and so hard as a field on the quantification and qualification of impact there There are a lot of activities going on around impact harmonization that i'll talk about in a second. Um As well as corporate disclosure, so um I I ended with some of the u.s. Regulatory backsliding um and That said I do think that the acceptance of financial materiality of sustainability issues of impact factors is finally entering the mainstream um Although his uh proxy voting record black rec pro proxy voting record on climate and other esg issues doesn't entirely bear this out Larry fainthe ceo of black rock since 2018 Has continued to place long-term issues like climate change at the forefront of his annual letter to ceo's the issues that every january In march, there was uh an incredible public statement, uh published by calsters, which is the california state pension California california state pension for teachers the teachers retirement system Joined with the largest pension fund in the world japan's 1.5 trillion dollar government pension fund and the uk-based uss investment management they published a letter that was Really unprecedented a public statement against short termism Um, and they believe the short termism leaves their portfolios as universal asset owners exposed to what they call potentially catastrophic systemic risks which has only been, uh Um, you know a fine point has been put on that Because of the current crisis at the market volatility, um, etc. So it's like what is the We talk so much about alpha, but what is the uh The beta risk which i know uh delilah rothenberg um The pre-distribution network is doing some really interesting work on that. So it's a lot of ways all about alpha It's also about beta and we've seen that over the last six months or so um So I think we are driving toward a mainstream agreement that long-term esg factors are relevant and material The question is how do we hold, uh corporations accountable to those indicators? There are a lot of different approaches. It's largely been voluntary voluntary corporate reporting to date on esg metrics something like 80 85 of all the the top thousand Um, uh corporations in the world do issue a sustainability report, but Those impacts are you know, cherry pick self reported unverified unaudited Another tool is shareholder resolutions and shareholder engagement, which we know is getting chipped away at At least in the united states There is increasing reliance on third party public engagement efforts like just capital which ranks us publicly traded companies On how well they serve different stakeholders including workers customers communities We're looking to see rising watchdog functions And watchdog organizations in this area and finally, of course mandated disclosure through legislation and regulations So we have someone talking about carrots and sticks, you know regulation and legislation is a stick for sure You all know that there's a round table statement 181 CEOs A pledge to pursue value of all their stakeholders not just shareholders um So while that was encouraging we now know that there's there has been a lack of follow-through or You know, we in the alliance talk about regulation and self regulation and uh, you know, it's a little bit unclear Uh, what the proof is in self regulation There was a recent report from kks advisors called the test for corporate purpose That concluded that the brt business round table signatories largely fail to deliver on their statements of purpose in the midst of covet um But just to end on a slightly more positive note that Perhaps not surprisingly doesn't have to do with the us. There's significant regulatory process being made in europe So the european commission is currently working on regulation that would mandate standardized esg disclosure for corporations Right, this is something that in our field. We think, you know, we we shoot for esg mandated disclosure on the 10k So the european commission on the federal government level is is working on that the ifrs Which is the gap generally accepted accounting principles outside the us They're in a consultation period to develop sustainability accounting standards and these developments could drive Very substantial change in the global capital market So we're not giving up on us leadership for mandated disclosure And an economic system that serves all stakeholders just yet But at the moment it's really heartening to see the leadership seeing the european commission and the european union step up And we'd love to see that keep that momentum going great Monique, would you like to take the same issue? Yeah, i'll think i'll just talk a little bit about sir ronald cohen and george sarifam's effort as a relatively newer Kid on the block impact weighted accounts I you know i've been The privilege of having a few conversations with sarani in the last couple of weeks Through so cap and i think you know i've heard a little bit about it I shouldn't share a little bit more and also there's a great piece out of hbr That describes it a little bit and i think it's a really important development to the point of A friend just shared You know the third party disclosure and evidence is much different and you can trust it in a different way than Self-reported and not independently verified partly the impact transparency that we're all calling for with all of these accountability efforts And standardizations is related to can we trust this information? And if we cannot and certainly that has implications But um, how do you get to true impact and that's exactly what this effort is Trying to figure out is what are these negative externalities that don't show up in the balance sheet that don't show up in your 10ks or whatever reporting you have in your country And what can it tell you when we when third parties get a chance to quantify Especially things that are social squishier environmental things that are harder to quantify So this effort that they put in assessed over Nearly 2 000 companies in their data set. I think Really what is Probably intuitive some that the profits that some have made would be wiped out by the opposite end of Environmental damage they've caused That's powerful understanding that from not just probably I think that's that's likely the case to having the math having the data And really efficient market theory suggests that if you knew this in a verifiable quantifiable way You would take that information into your account for your investing purposes So I think in the sample set specifically i'm deciding it here 1694 companies That turned a profit in 2018 15 of those would have seen their Profits wiped out by the environmental damages the offset. So what does this mean? What can that do for impact transparency if you know this? Number one They suggest governments will be able to tax companies for the harm they cause instead of where we have now You can pinpoint exactly who the bad actors are and hold their feet to the fire Which we've kept keep talking about is really important because If governments have the dollars to deliver on the changes that they need to do from the policies and really can Take some action. It's certainly that has great implications for our work and radical collaboration in order to deliver on these goals Investors will be able to price these social environmental impacts into their analysis efficient transmission market theory We just said and the transparency will allow customers individuals companies people employees to vote with their feet On the companies that reflect their values And this is an important tool for empowerment for everyone to make the choices that they feel really reflect who they are And of course this guards against impact washing that you said it did the thing and it doesn't do the thing And that's really an important Thing to be able to verify. So I'll stop there But I think that it's a pretty exciting initiative and there are many others out there who are doing some interesting work But that's a recent one that many might not have heard so much about just yet Thanks, Monique. Um, we've been nibbling around the edges of stakeholder capitalism kind of referring to it But not really addressing it squarely um, a number of groups in our field the the the The us impact investing alliance the gin be love imperative 21 and many many others Are collaborating to actively think about what a reimagined economic system could look like At the very least I think there's an acknowledgement that we need to move beyond the current system Which incentivizes short-termism and extractive behaviors um But for that we really need full scale acceptance of the financial materiality of impact factors And you know the impact weighted accounts and other um The other kinds of activities that that I mentioned earlier and and Kathy mentioned earlier steps toward that There's also the compact concept of impact materiality alongside traditional more traditional financial materiality And that would be a company's impact on their employee's economic well-being for example So whereas financial materiality is um, you know ESG factors are financially material to the investor impact materiality looks at the material impact on the world and on stakeholders that are rendered by companies And finally there's you know if we're kind of going a step further from financial materiality to impact materiality to Shifting of power dynamics. So that would be another piece of the conversation Um, that's been circulating around this idea of reimagined capitalism We've seen some smaller scale local examples like ujima fund in boston of these kinds of con concepts, which is very much Sharing or seeding power to rent local residents local entrepreneurs To be invested in their priorities and what they think is best for their communities um But on a broader scale transferring power to achieve greater equity in the capital markets would require Uh a lot of government intervention or a wholesale cultural shift in the business community so, um I think in some ways we're still having the debate about the financial materiality of impact in the kind of mainstream capital markets But would love to know if either of you are seeing any early signs of stakeholder capitalism trends Or ideas being put forth around broader power shifting that would be you know, real systems change So kathy, maybe we can start with you Yeah, I you know, I have a a long-standing devotion to this topic as you know, we built The whole framework of b corporations around stakeholder management Right, that's the core of that frame that we created 10 years ago um, and then to see the business round table and others Affirm that um Has been you know amazing and for b lab and others to say, you know, we we have some experience in this that you can learn from um But I would also say that you know in looking at this and you mentioned friends some reports on you know kind of what have people done around Their different stakeholders. I actually think we're we have a little bit of a uh intellectual vacuum around what the practice is that we want people to um, actually take up to Show that they are actually doing this Um, and I'll give you an example, right? There was a there was a piece and fran put it on her linkedin profile A few weeks ago in the new york times that basically said that some of the signatories of the business round table had during the pandemic Fired multiple thousands of employees and the next week bought back some of their stuff right and so, you know realizing that You know, unlike, you know, we we've been really kind of uncomfortable and impact vesting and investing saying there's always a tradeoff between finance and good When you're talking about stakeholders, there is a tradeoff You get one dollar. Where are you going to put it? Are you going to put it into the employee pool or in and pay? Are you going to hold it for a rainy day? Or are you going to pay off the people that that own you? You have to make these choices and I feel like maybe I haven't seen it. So this is a plea to the people on This session. I'm really I'm looking right now for really good frameworks or writings or kind of intellectual capital around how people manage stakeholder discrepancies and choices and what we expect um companies to do I think what we're doing now is reporting what they did afterwards Um, and sometimes that is imperfect. I don't think at the public company level. We're very good at at At making that part of the auditing right when somebody makes a choice Um, you know to do layoffs and then and then uh, and then pay their owners Do we even know about it? Is that even triggered in the in in some sort of audit or in an impact audit or something else? It's for us to know about and so I just feel like Um, you know, well two of the questions at the beginning were how is impacting this investing different from five years ago? This is one way. It's hugely different. We now have you know, the the CEOs of the planet committing to this concept Um, let's make it real for them. Let's let's and another question at the beginning was what's not happening fast enough Lindsay asked that I think this is one of those things I think we're going to lose this opportunity if we don't um put their feet to the fire so, um That's that's what that's my that's my plea on that topic. Um, and please help me if there are other things that we can be learning to see um, how to um Make this real at this for the for the people for the impact investing community you know, what what can impact investors do to to hasten this conversation money Turn it over to you on on stakeholders Yeah, and I think there are a few folks who we have some green shoots there too on who's doing it well and right or at least attempting to Fail faster or fail publicly. Um, you know I think that the work of heron on really listening to communities and not just listening Which has been the trend of like the conversation from even five years ago if we think about that But actually seeding power and one of the ways they're seeding power directly is to Take the five to ten communities that they have been deeply you know engaged with over time and actually give them the power to You know decide on the dollars that they have been allocated. So this is an interesting trend. Um paralleling them directly to move the capital and the deployment decision making And the systems thinking as part of our conversation in in impact investing others I think we started a little more rudimentary with You know getting people to deploy one additional dollar But now we're thinking about how is that deployed and is it moving the needle? Is it addressing structural and systemic stuff? In august impact alpha had a call on systems thinking dialogue with the systemic racism Conversation, which was an interesting juxtaposition and for those who weren't there. I'm putting their link in the chat You can read more a little about it. Um, you know, we had The investment integration project who's been out front talking about systems change on systems level investing and demetric duck it From who heads capital for the new majority at living cities on that conversation And I think this just even talking about systems change as part of this dialogue as within this movement is A bit of a shift. Certainly. There are some forward thinkers who had been there But this is kind of an acceptable level of conversation to be had in generalized spaces, which was I think where Even from just when I started in impact investing a few years ago So, um, I think there's another great example. Um that recently came out just this month. Um, You know world resources into to talking about aligning their entire endowment with paris agreement goals Uh, you might have thought they were already there. Um, so that they weren't it was important indication And the fact that they were willing to get out front and really think about all the ways to think through Um, you know climate as a systems change question and how that percolates and cross cuts throughout Our society and our investing practices. I think is is interesting to note great So before we we're heading towards the last 15 12 minutes of the session I'm going to ask us each to kind of come back with some wrap up questions But before we do that, I'm going to give you Two or three minutes to see if there are any questions from the beginning that we popcorned that you want to address Now that we've gone through some more detail Fran or money Yeah, I'll just start. There was a question on careers earlier on which I get a lot. I'm sure cackin friend. You get those quite as well Um, certainly some of the resources that are curated on various jobs board on the gin and green jobs lists and some others Um, you know some some of it is a little bit of insider and so those folks who are interested in careers I think talking to people here because it is uh, you know, niche within the scale of larger frame of finance But there are quite a number of opportunities and a lot of opportunities for young people to get smart To attend conferences that are open to the public like this and others to understand what's going on I might have a visitor who's about 18 months old just in a little while in case he decides that he needs to come see mama But um, I think that's important thinking about the future of the field. He might be a future impact investor himself Um, but you know, I think careers are an important question But there are many roles and I think what I often feel for folks is I don't have a finance background Is there any job for me? But there are Measuring and management and all the kinds of functions to run a business that are within impact investing too And so the field I think has room for a lot of different people and a lot of smart adaptable people and um, you know being able to to do Round a spreadsheet in your sleep is not the only requirement in order to be effective in impact investing So I'll pause there and allow Kathy and Fran to address some of the other questions Kathy do you want to go? I would just echo what money said. I mean I answer this question about careers probably every day every day in some way Through through what we do in training our MBA students and and then it appears that every undergraduate student wants to be an impact investor recently So, uh, it is extremely popular topic. Uh in this generation as many of you know Um, and I and I you know, we have we have job boards listed on case i3.org We have uh many many resources For people who are at the different stages in their careers and number one thing I say as Manika said is there's jobs Managing money in which case you do need to have a finance background or get one And there's a lot of jobs advising and consulting. Um, and even more as the impact measurement space Pro thread which allows me to kind of go back to something that a thread that was in the the chat, which is, you know Worry that we have too many systems And that is a paralyzing impact effect on People or or allows more greenwashing these people to kind of choose a system that works for them. Yeah, it's a huge issue And you know, we we have not gotten to the place where we have a gap You know a generally accepted way of doing this, but I think we're making tremendous progress um I'm sure I think if there's anything else that I wrote down from the from the you know somebody said Uh, you know, what would it take to radically boost this field? um Fran and Manik, you know anything? Um, yeah, so evan Gil asked a question that sort of relates to one that ruth shabers um Typed in earlier ruth was asking about, you know, what is it going to take? What is the? um What are the data set to suggest that impact investing doesn't have to be concessionary? and on the other side evan asked When um, you're seeing a shift in how capital is deployed from market rate to lower cost alternatives such as recoverable grants and some of the tools that you talked to that you opened with kathy and This is sort of a you know a perennial just like how do you measure impact as a perennial? It's you know, is there a trade-off? Does there have to be a trade-off? um, does it matter and the and of course there's a trade-off at times and I think what it would take to get to scale on some of the lower return high impact tools that kathy was talking about whether it's demand dividend or revenue rights or recoverable grants low interest loans zero interest loans um I think will require um I don't think we get there just by high net worth individuals doing like bespoke deals and foundations doing bespoke pris I think that those are really important We'll hear about a lot of them in the context of socap But I think what evan is really asking about is how do we turbo charge them? And it's such a good question. Um, I think the ultimate answer is that folks need to be thinking about the nature of value and I know that this is like the um, perilously close to the wheelhouse of jet emerson who's with us, but you know the nature of value itself and To the extent that folks can start rethinking about how value gets created in a kind of a basket across social economic environmental and and and financial impact Returns is really important and and I think that's what it's going to take a mindset shift Which is what we have been talking about today. Um, again not to minimize the the I love fantastic bespoke creative deals But like how many complicated brain Cell killing cat complicating capital stacks. Can you do? Um, on the other hand, we've been talking to Folks at the Federal Reserve about how to create a Actually a facility or a window at the fed for cdf eyes Um, so something like that this is like is that Levi? Oh Hi, hello What a key so I got my dog barking at your kid reality is stepping into our All your stagecraft goes out the door when the toddler starts screaming in the back room Yeah, so just thinking about um I think we need to be thinking about scale replicable solutions in order for us to get to the magnitude of of change Versus nibbling around the edges with super creative, but kind of Not less replicable deals So feel like we should probably shift to some of these like last thoughts But we're looking at the this has been such a robust chat and I wish that we could like all spend an afternoon together because All of your comments and questions are so rich But maybe we can shift to Like a little lightning Yeah, let's do some lightning round. Yeah, I'll set it up Um, I just want to say thank you the chat has been amazing and that one of the great Silver linings of all of these virtual events is the the sub conversations that can happen Uh, uh below below and between between Uh, the main conversations and how grateful we are for all of that for all of you So the lightning round i'm going to set it up. There's really two questions The first question is what do you think we're going to see in the next year? Within the impact investing ecosystem. What do you think is likely that's going to be interesting? And then the second question will do that round first second question is What do you think is actually needed? For a durable system change. That's not part of your first answer That would be nice to see if we could wave our magic wand. So fran, what do you think's likely in the next year? um What I think is likely in the next year we we talked about this is relatively When wanting to put uh kind of words into action I hope to see Um very high level of public accountability for commitments corporate commitments to dei and racial equity Not just corporate actually from asset managers from investors and others. I think it is um, there have been proliferate uh dei and racial equity Commitments and and monique talked about them earlier, but having the kind of um public accountability public engagement uh watchdog organizations that can really Hold folks accountable so that there's truth in advertising around this like the most this this most essential area Money can I ask you to lightening around now or would you like to pause? I think one of the things that Earlier what's missing and I think this is part of this conversation here with what we need to see in the next year What might we see I'm hopeful that we see um an increase in catalytic capital and folks willing to think about You know what is needed to build the field what is needed to do the orange pay for the r&d needed for this field Whether that be supporting some public goods some other kinds of ideas new initiatives and other ways to ensure that we can radically collaborate I hope that I we see an increasing and sustained dissatisfaction with incrementalism I think we've largely been content to say we're taking some action and so that's sufficient um, but people are not in the streets because Some actions in a small scale with slow speed are have been sufficient Um, we need massive changes and we need them urgently because of the challenges that we have ahead of ourselves And these new solutions to be intersectional They need to be interdiscipline interdisciplinary And we need to really think about lowering our egos so that we can effectively collaborate And I think those are some of the changes. I hope to see I don't know if we will see them But I think this idea that everyone might share A bit of convergence around outcomes and human centered design from governments to social sector to business You know, I think there's a broad awareness and you know impact alpha framed it as an impact on world and can we collectively Make the choices to make that sell So I think you know, you're asking what might we see we can make some predictions But we can also ask for it and I think those are what I'd like to ask for Great and my uh smaller prediction perhaps than some of those is I think we're going to see more and more Auditing of impact whether that's verification assurance or auditing whatever the right word is I think we're going to see the accounting firm step in I was just reading a Survey of 4400 accountants around the globe and two-thirds of them think that they should be doing this Um, uh, and so I think that's going to happen. I think it's going to be on the easy step So I think it's going to be on the steps that we think is not all that interesting and not all that telling it's going to be around outputs and and Not necessarily the things that are proxies for for real impact But are really kind of the the things that they think are within the realm of related highly correlated to economic value Um, and I would love to ask the second question, which is what do you think is actually needed? For systemic change and how can impact investors contribute to that? Yeah, so I've been reading a book called Emergent Strategy, which might be life changing and I'm only in the introduction. Um, the idea We are living in the ancestral imagination of others So our current reality is choices others have made What does that mean? Who were they thinking about when they were thinking about who would be participating in our economies and our democracies? They at least are Say it's we're not expecting anyone on this call at least to be working to be voting To be participating in a thriving economy. So what are the choices we're going to make to? You know support the future Lives that are represented of the imagination that we have right now And I think it's a new narrative we need I think one of the things that will ensure durable change is a new imagination Of not just capitalism of what it means when we allow Everyone who's been marginalized and disenfranchised to thrive and what are those choices? structural and systemic that we need to We need to make right now so that the ancestral imagination that our children or our children's children now live in Is a fair and a just one and I think Today we can start by seeing what that future that we've never lived in looks like by asking the creatives and others who deal with narrative to um allow us into their spaces as finance and impact investing people who Normally are not in those creative spaces to allow us to um Be our minds to be expanded about what is possible. And I think that will help Ensure those durable changes that we require Tuffy, do you want to go or shall I? Uh You know, why don't you go? Okay? Um, muddy. Thank you. Um, I want to read that book um in terms of durable and lasting change, um I'm gonna end on a note that I started with which is the importance of public policy just in terms of the scale of change and the magnitude of the capital and incentives we need to leverage Um, I mentioned the regulatory backsliding, uh, but and you know, the alliance has a lot of time playing defense Um, but we also want to think proactively about how public policy can help Further our objectives as a field Scalar efforts to enact systems change and we've seen that both the private sector and philanthropy are Really overwhelmed by the current crisis that we need government. I mean there's a crisis of in of of uh Of belief and and trust and institutions and government in particular For reasons that are probably obvious But we we really do need to lead with government with smart catalytic catalytic policymaking. So I hope to see And I think that um real durable change will happen with a resurgence of collaboration across sectors Great, we are slightly over time my my small Uh plea which is a smaller answer and maybe I should have given it before Fran gave her a larger answer was um I think that we are going to need to pay attention to stakeholders employees matter Their ability to Feed their kids and and have housing and all these other things that it's been made it's been made so much clearer And we need to take advantage of this moment to do that to change the system You know people are talking about the great reset. I believe the great reset is needed I don't think we're going to get there until we start making a way up some very small things Consistently and we sure need policy to do that. So Please join me in thanking monique and fran And thanking the all of the audience That has been chatting and sharing resources and poking. This is an amazing session. We totally enjoyed it. Thank you so much Thank you everyone for your great shots and have a great soak up