 Good morning folks. How are you today? Thank you for making it all the way to Cal Theatre at 945. I was joking with these guys earlier that when we were conceptualizing this session we were really excited about the content, but we weren't that focused on marketing, which is the title and so you know really it could have been the future of capitalism colon implications for impact investing but instead we just you know have this bold throw down the future of capitalism and as smart as my Panelists and discussants are we're not going to be able to figure it out alone And we're not going to be able to figure out in an hour So we're really looking forward to having this be more of a dialogue So I'll speak a little bit to introduce the topic pose some questions to the discussants and and then we'll get in Dialogue with you. So we're really looking forward to that I'm Fran Siegel executive director of the US impact investing alliance, which is a field building organization Focused on flowing more capital to impact investing. We have a long-term vision to transform finance By placing measurable social economic and environmental value at the center of investment decision making alongside risk and return and We believe achieving that requires top-down Activities and bottom-up activities and so the strategies that we use are to first to our top-down The first is policy So we seek to create an enabling policy environment in Washington for impact investing and we also work with select institutional asset owners Mainly now foundations and donor advice funds to help them understand the barriers to capital flows and see if we can work together To address shared challenges So we consider those to be top-down levers of change, but we believe that the the kind of Future of finance and a more equitable world will occur at the intersection of top-down levers and bottom-up levers And so we do work on movement building and we'll really want to dig in with this group on some of these bottom-up Mechanisms so today as you know the topic is the future of capitalism So the foundations of our political economy are straining before our eyes and As we work to address the pressing social economic and environmental issues that we all do is impact investors and impact Entrepreneurs, it's also important to take into consideration the broader context in Which we work so issues from climate change to gun violence are causing a new generation of leaders and activists to challenge core assumptions about the system of capitalism We know that poll after poll suggest that Millennials and Gen Z have an increasing negative view of capitalism and prefer socialism or another alternative This is not just the province of the young we have Bernie Sanders running on a kind of platform of socialism unapologetically so But I think it's important to note that the discourse has changed and the universe of what could be and can't be has radically changed and So as impact investors, we need to understand how this changing narrative implicates our work So at the UN General Assembly the activist Greta Turnberg Called out the fairy tale thinking of perpetual growth and yet the thesis of impact investing a lot of the work We do focuses on scale and In many ways is predicated on this system of continued growth Also hitting on this tension critics like Anand Girardis the author of winner takes all Is challenging the kind of false the fallacy of win-win and the idea that systemic change can be achieved without Sacrifice specifically the sacrifice of power By those who wield it So are we doing enough to engage in a conversation about power? And are we willing as impact investors and practitioners people of privilege largely? Willing to cede power and serve us a more of a more democratic and equitable society But skepticism aside we've had some recent developments including the business roundtable announcement 181 American CEOs signed on to this new purpose of corporation Focused on a stakeholder value not just the primacy of shareholder value Excuse me and while the sincerity of that CEO commitment is certainly has been questioned There's been critiques that there are no teeth and indeed there are him I Feel like the commitment and the statement itself is a really important step So these are complex topics Some of them have already been addressed at SoCAP so on Tuesday there was a discussion a Panel about whether we need to accept cap capitalism at the end state of our work or if there are alternatives and several speakers talked about an examination have a have how indigenous communities organize themselves and really questioning our cultural predisposition toward Existing systems and institutions So I have two very smart thinkers and doers here Andrea Armini is the co-founder and executive director of transform finance and Shweb Siddiqui Director of impact investing for the Sirdner Foundation, so thank you so much for joining me today And Andrea, I'd love to talk with you and We talked earlier about how the vision of the alliance is to transform finance your institution predated hours, which is indeed called transform finance And wondering if you could talk a little bit about how you see the transformation of fine finance and whether that implies a transformation of the broader economic system Sure, thank you very much friend We're looking forward to a discussion and to the end to the questions So it's not so much that the transformation of finance implies the transformation of the broader economic system It's that there will be no transformation of the economic system unless there is a transformation of finance So we have gotten to a stage where the economy is largely financialized a lot of the Financial activity never really touches down on the on the ground in real in real enterprises, right? largely speculative self-referential type of activity and and It's it's a situation where say I think of the Finances like the the fuel and all the pipes to make the fuel get to the point where it needs where it is to be So that let's say whatever the car can move You would probably go for an electric car analogy, but But now it's is the fuel that is determined where the car is going to go, right? So we need to break that equation first of all that is the piece of transformation and oftentimes I think we're still looking just at the actual Implications of a specific investment on an on an enterprise as opposed to this broader systemic view of the of the transformation So I think if we were to get everything right that we're trying to do as impact investors Would the world look any different and I posit that it wouldn't unless we think about the structural issues and The governance piece the ownership piece The really the plumbing all the unsexy stuff of the of the economy that ultimately is dictating all this Altis outward results So the the answer for me would would be we need the economic transformation and that is contingent on the transformation of capital Because that is what's determining all those outcomes so what you're saying is that Impact investing and the work that we and the outcomes that we seek in and of themselves would not Transform the system It depends on how you define impact investors, I guess And we don't you how would you describe impact investors? Well, let's let's have two two examples out there And I think people can self-define as impact investors if you're looking at the problem They want to solve through the through the use of capital right their children Bangladesh with no water We're going to invest children Bangladesh get the water the underlying problem is still there, right? So that's one type of kind of topical impact investor that is looking at the We can call them palliative if we want to be a little bit Pushing into that edge, but generally looking at the problems and not at the root causes of the problems I think there is an emerging group of impact investors. They're thinking wait How did we get here in the first place and how are we now going to replicate the same problem, right? If you do the the investment in water for the Bangladesh children You still end up with a system that will create more and more of those of those problems if on top of it You make money and you beat the market as some many impact investors try to do You are still further Widening that wealth divide between the children that now have the water and you still have the money they had before you actually have even more wealth so unless we we lean into that That notion of the wealth accumulation that comes from the impact investing and the governance piece, right? Who gets to decide these things? Who will benefit from it? We're not going to get to any sort of transformation right So I think what what you're implying and actually stating is That is as impact investors. We are complicit in a system No, I would say, you know kudos to what Right even CSR is great. It's better than nothing, right? But how is this going to get us to where we want to go right? We need to be extremely clear Do we want the kids to have water or do we want really a better world where the underlying issues have been? Have been addressed and where we're not perpetuating the same the same dynamics So yay for anyone who's investing in any kind of topical thing But how far are we really going to get in terms of making the world a better place? Okay, thank you So Shweb you work at an institution that has a billion dollar endowment You have carved out a certain amount of it for impact investing you work both deploying the impact investment portion I know you have thoughts about the broader endowment, of course And you also deploy grant capital to try to kind of shape the market Can you opine a bit on these topics specifically as it relates to? Complicity in the system. I Mean I think that there is there is complicity in the system I think that when we think about our impact investing portfolio We really step back and ask ourselves some of the larger questions that Andrea sort of outlined But I think that one of the things that where we differ a little bit is that there are parts of the system that we think work And how do we leverage the existing capital infrastructure and move capital to places where it isn't flowing I think using the Bangladesh water example. I think it's app, but I also think it's not finance That's just simply creating that challenge. It is government corruption It is a whole host of issues that are sort of enabling that and I don't I think part of it is finance And I don't think that that is the only issue But I think that we have to recognize we are operating in a broader system and capital is one piece of that larger pie And I think that you know my experience in the developing world One of the biggest challenges pain facing low-income communities is corruption their ability to access goods and services and the corruption that they face And so I think that this is where I just I remind everybody that you know finances is large You see the large numbers you see capital flow but we also have to remind ourselves government is even larger and the government has a significant amount of power both in potentially redistributing wealth all the way to creating policies and regulations that enable or Create some of the issues that we see or some of the benefit that we also see I would also say with the complicit see a finance I think we're thinking more about how does the broader system change as we're thinking about even our impact investing portfolio We're recognizing you know, we're focused on impact, but it's not just the impact It's how and how we do the work that we do how the companies or the entrepreneurs or the fund managers we invest in It's the values with which they show up because we recognize that there will be issues There will be challenges businesses will go under new businesses will get created But are they exploitative do they take into account people planet and community and so it's not just simply hey We solve this problem for water, but we also recognize Okay That's how we do it that is also part of the challenge from my perspective when we think about the challenges and capitalism It is the short-termism that exists of like I need to make my money now and not realizing you're gonna that That you're gonna have to pay for that at some point And there's plenty of examples in corporate America that are littered with sort of the short-termism that exists And so how do we think differently about that that incorporates this set of values? And do you think in the philanthropic context where there's a lot of pressure on endowments and CIOs to deliver? You know five percent grand payout, maybe you know plus another one or two percentage points So your endowment is not eroded by inflation. There's We talk about foundations as being largely perpetual pots of capital But there also is a commensurate pressure around the payout to deliver, you know seven percent, which is hard Hard to do and so how do we think about that tension around time frame? on the investing side relative to You know the system and ultimately the the impact that we want to see and I think part of the tension is reality is like You know and someone's always says this its best is like sometimes the endowment is creating problems and communities that then We think the grant dollars are going to fix and resolve right? I think we're very well aware of of that tension that exists I think for us and one example of how we're solving that that is the role of the we as allocating a hundred million dollars of our Billion dollar endowment it's really to say hey Can we find? Investments that are benchmark competitive that are able to grow and scale and create a better future or are trying to create a Better future that one day we can imagine sit in our endowment and that's our core thesis of okay We think that's important We think that we need to align our mission and our values with our grant making in our endowment But we also are like we can't just flip that switch overnight To move a billion dollar endowment and to move assets around it's quite expensive and it's significantly time consuming And so I think this is what we're attempting to do and we're excited to say we've had some of our Investments move into the endowment or put some follow-on capital in from the endowment and we're quite excited by that because we believe over time We need to see this evolution But we also recognize that the grants that we make are important part of the community and we don't want to put that at risk either And so this is how we've balanced that tension And this is really I think the role of why we created that pool of capital to really take the risk Understand learn and then see what we can transfer over into the endowment For both of you as you see there's no denying that There are there's you know, Santiago is is Burning, there's protests The yellow vest movement continues there's a lot of challenges and pressure that is coming and voices of descent Frustration with income inequality and other aspects of the incumbent system Do you feel like we're in a moment where we have you know Greta throwing down at the United Nations Direct experience of climate change irrespective of whether you believe it or not Is this a moment? Is this a moment for for us? And if so To really question the fundamentals of the system Are these kind of leading indicators of change? Do you think that these are? moments of Concern and yet we'll kind of go back to the set point that we always have I always felt like the 2008 financial crisis would have been a unique opportunity to fundamentally question This the system and how returns get made and I think it was a lost opportunity for our movement I'm realizing that the term impact investing had just been coined and maybe we didn't have the kind of Consolidated movement that we have now but is this is this a moment is this a moment to for us to Assert our thoughts about systems change in a fundamental way For my perspective, I'd say yes for you. I think that I would say that the 2008 What happened in 2008 is actually we're we're having that conversation as a result of 2008 I just think when 2008 and the follow-on that happened everyone was sort of that was it was panic, right? And we were focused on Families were focused on survival. We had job massive job losses And people were worried about even the future of their 401ks endowments universities I think that it was sort of like we needed to just sort of stabilize for a moment And that's why I think at some point because impact investing was so new I don't know if that would be the moment to sit there and talk about what are the risks that we are taking or not taking because Everyone is just sort of like actually is the world ending right on some level that was the panic that that existed I think this is the conversations and the discussions we're having now is still an outcome of that reflection of and a reminder that that crisis happened and as coming out of it income inequality and wealth inequality is only further exacerbated Right the realization that when households that you really your ability for a household to survive a financial shock like that Is if you if you survive it you actually will generate more wealth if you're able to hold on to your home Whereas for other people they were kicked out of their houses and now they're moving into rentals and that ability to create wealth Doesn't exist and so I think even the income inequality and wealth conversation we're having in this country today is a direct result of We had a major financial shock in this country and look what it did 10 years later 11 years later, and we're still and we only see that getting worse It's a conversation that we had with our board and our investment committee talking about the wealth the race The racial income and wealth gap that exists and the implications to our economy as a billion dollar financial institution Yes, we are a foundation. Yes. We're a grant making organization We're also a billion dollar financial institution if you think about you know 50% of our population I think by 2050 is gonna be black and Latino, but at the same time there's statistics that saying black wealth is gonna go to Zero and I think about 12 years later Latino wealth is gonna go to zero. That's a significant risk You know where are people gonna shop buy cars where this if we don't have people that are able to buy goods and services as an investor And so there for us we talk a lot about internally about the economic implications and that we can't just think oh These are wonderful issues and the grant making team is thinking about them and pushing them forward There's implications for us that we need to actually think about it from an investor context and if we don't 2015 or 20 or 30 years from now we will be our endowment will no longer be you know 5% plus inflation What are we actually investing in and what are we able to achieve? I would say there is definitely a moment one that we're likely to miss unless we really think about it a lot and and it comes from two directions one I think is from the From the owner side, let's say from the ones that have historically deeply benefited from the system that are saying holy cow Barbarians are at the gate the pitchforks are coming for us How much do we need to change so that the whole thing doesn't blow up in our face, right? And so you have a little bit of this Kind of business round table type of type of openings where it says oh, no Let's finally recognize that you know the current system is unsustainable even for us But how do we perpetuate that power and that privilege while giving up a little bit right? You know sort of an escape valve type of approach Fortunately the the moment is spectacular now because it's combined with this growing awareness I think on the activist side on the social justice leader side that Finance is a worthwhile arena for social change right that we can't ignore it We can't just say oh Wall Street is evil. Let's pelt some eggs, but we really need to get amongst it We really need to to figure out how to how to do it So if we can combine sort of that very mild opening that is coming from those that have historically benefited With the groundswell of energy from the ones that have historically been exploited or not benefited from it Then we can really like open up that that the initial Kind of yeah opening that has been provided by the by the business round table and by similar pronouncements But if I may then we need to divide his entire swath of people based on what they're really after right? Let's take the trade. Can we can we get into it? Yeah, so If you're a foundation and you say well look I have my billion dollar endowment my priority is to perpetuate that endowment, right? So I show up first as an investor and then as a social change agent. Well that okay That's great. Let's see how much we can do in order to improve the the parameters that you have Pension funds right? Yeah, we have to pay out our liabilities. What do you want me to do? Like give it all away. No, that's that would be unreasonable So there's one side there are others especially at the family office level I think they can say I want to be an agent of change, but I suck at demonstrations I suck at advocacy. I can't organize all I have is money Therefore money will be the way in which I show up as a as an agent of change, right? They're two very different dynamics. One is How far can we improve but our our priority is still getting the returns and the other is to say no No, our priority is the change. Is there a way in which we can use the capital to Shraib's point about capital being only part of the solution as a way of driving that change? No, I'm gonna now I have to respond I Think that at what cost right? I recognize the moment But it is I think that one of the things that we forget it a lot of the change that has happened There is positive aspects of institutional philanthropy, right? One of the fears that I have is that imagine that okay? We take all these risks we act as we're agents of change and maybe we're wrong and maybe that's okay And so certain doesn't exist in the future a lot of the other larger foundations don't exist in the future So then are we now back at the whims of wealthy individuals that have new wealth and then they determine What are the issues and social problems of the day so 20 years from now? We took all these risks and we weren't necessarily Right that the billionaires of the future and like you know We care about malaria in the US and we're gonna create a foundation because that's the world that we live in and that's what We think is needs to be solved and that's what it is And so for me I think about and what concerns me is if we completely give that up What is the future cost and where are we going to live at that place? And the idea of the elite and the wealthy dictating what society needs as opposed to I think there is a as much as I Agree with a lot of the criticisms of institutionalized philanthropy I think there's a role and there's an important role that it plays that has some thought that isn't like I think this is a problem and this is you all live in my world and I have the money So I'm gonna determine what happens in the future. I think that's a significant risk And so that's something that I'm very very thoughtful of as well Yes, but I don't see a big difference between the the current wave of institutional philanthropy and the new wave of of new wealth, right? Mr. Ford, Mr. Rockefeller, Mr. Andrews like they were they were not poor, right? They had their they had their agenda that they were pushing through the foundations They got to set the original parameters and then things changed fortunately in in those foundations But it was still predicated on that initial allocation of capital that had been kind of extracted, right and and consolidated and The and I think you get to a problem. There's much more fundamental for all of us, right? The moral question of okay We're trying to advance a certain vision of society through our deployment of capital Nobody gave us a mandate, right? I don't have a mandate to invest in order to make anyone better off frankly nor do the foundations nor does the new wave of tech money and that Gives us a little bit of pause also in the context of the the CEO actions that we have been that we've been talking about right where you have a CEO saying Okay, we're no longer stock a k-47s Whatever right? Hey, okay, but you have now privatized something that should be part of the public sphere like the decision whether Your sporting goods store should be stocking a k-47s in the in the first place So are we really in a better position? Even if we agree with the underlying stance, right and with the and with the result are we in a better position if we have abdicated all sorts of public Accountable democratic decision-making to those that hold the capital whether they're the foundations the new wave of Philanthropy, right anybody that has a vision and says yes I will you know throw down my billion dollars, right when you have sorry plastic Tom Steyer or Our friend up in Seattle right saying I will spend my entire fortune to undo the Trump administration, right? Great. I'm on the same page. I don't have a fortune to spend on that But how is that different from somebody, you know six years ago saying I will spend a billion dollars to undo everything that Obama administration is doing we'll be deeply upset about that, right? So this is about the privatization of power And the privatization of civil society I mean I struggle with this because I think that when I think about all the names and the foundation wealth You know, I think Fran as at the U.S. Impact Investing Alliance My favorite slide that I love referring back to is the one that sort of outlines I think something like there's 65 trillion dollars of assets in this country And there's essentially a third or two-thirds of it is pension plans that that represents labor that represents people And I understand sort of the way and the myth that's been created about how we've sort of Taken away power from labor in terms of being involved in that decision But I think we keep pointing to all this wealth that is you know Bill Gates and and Tom Steyer But it's like something like 23 or 24 trillion dollars in our market is pension plans that are investing and moving the market That is representing labor and people and individuals and I think that there's a part where it is partly democratic The question is are people informed enough to understand the decisions that we're making have we created a system to say? Oh, you don't understand investing. Let me do it for you. I think yes I wouldn't disagree with that, but I think that the tools and the levers are there It's a question of are we actually leveraging the existing tools and levers and informing and educating people to recognize their role in this at the individual level and after you have Pension plans you have 401ks and individual investment account that is the largest chunk of asset ownership that exists in this country And so I we can't forget that that actually that is a large chunk of money So can we talk about talk about to find benefit versus defined contribution? Most of us have 401ks or four or three B's where we make our own allocation our plans sponsor sometimes put ESG options on that plan to allow us to express our values through our Retirement many do not and then of course you have centralized centrally managed pension funds public pension funds and some still private pension funds that are centrally managed defined benefit But they're really the people's money and so that begs the question and and Andrea I know you do so much work with social justice organizations and trying to inform them about levers of changes It relates to finance and certainly claiming the power of pensions of our own money is is a good example So can we explore a little bit? What kind of bottom-up movement building looks like? I mean you do this. This is the work you do Yes and I struggle a bit with the with the idea of the bottom-up movement building because we have There is a bit of a narrative right about the the sort of frontline community is having the Solutions to many of the problems that we have. I find that many of them are quite technical Right, I mean the solution is technical not the not the problem and and to shape's point like it's not Rocket science right we we are still in a bit of that medieval phase where you have the mass in Latin You know and the priest kind of acting as the intermediary between you and God and it's too complicated for you to understand I know like if any of us understands it like, you know, we we really can all understand it There's been a historic effort that keeping people outside of the of the realm of finance So we absolutely need to dismantle that right that should be part of of everybody's education We have been doing some interesting efforts Actually supported by a certain foundation. So thank you for investing your endowment in a way that allows you to make grants to get worker justice organizations to Step into their power vis-a-vis capital strategies, right? Many of them have incredibly strong Strategies around influence around advocacy, but historically they've stayed out of the financial arena in terms of saying how can we partner differently with with investors institutional investors pension pension funds Municipalities right there are all these areas. They've historically been underexplored as Lodgey of of social justice like muni finance for example, right? Could you have some sort of covenants in muni bonds around the type of just jobs and good jobs that you would like to see can you get? foundations to adopt Responsible contract or policies that are reflective of the values of the organizations that the foundations are ultimately supporting on the On the grand side so Our idea is that we need to build a very broad base where everybody is aware that Finance such as everything if you care about any aspect of social justice of human rights of racial equity There is a finance angle to it It behooves you to understand what it is and figure out who might be your allies within that So it is bottom-up in a sense that we need to say broad swath of informed citizenry to do it But then I think there is a very Kind of sneaky top-down piece to a day's fundamental There's this kind of Trojan horses that are embedded within financial Institutions, right? I can stay and talk all day to you know, somebody that is doing a democratized hundred thousand dollar Loan fund at zero percent interest, which is super important in order to like kind of build a new but I should not be ignoring the person that sits inside black rock and Feels very uneasy about some of what they're doing and can start like tweaking things and creating some sort of openings That can then be that can then be busted down So it's a that the bottom-up needs to be combined with like well where are these levels of power, right? How can you get from the worker justice organization from the social justice organization in? Contact directly right in communication with with the levels of power that can actually do something about it Are you talking about subverting from the center? Yes Excellent we can explore that how many how many of you subvert from the center currently? How many of you subvert from the edges How many of you would like to subvert, but then then we'll know how coming out of this conversation And I mean I think that one of the things that I continue to and I agree with sort of the top when I think about the top down I think it's also when you look at pension trustees I think certain is working with David Wood at Harvard the responsible investing Institute working with pension trustees that are Representing their members that sit on the board of their pension plans and are doing some amazing work in terms of Setting labor standards in terms of the funds that they're willing to invest in In the specifically the private equity funds and what was amazing about being in that space was they were each sharing with each other Both of stories of where sort of the investment professionals were like oh no You don't know let us tell you all the way to how they got around that how they got informed and we're sharing those strategies And I think it you know again, and we talked about okay foundations having policies and practices in the way that we invest We represent point nine trillion dollars of the overall asset market And I think we have to do all of these things I don't disagree with it But the reality of it We don't have the same voice of a pension plan that is writing a twenty thirty million dollar check into a two 3400 million dollar fund or a billion dollar fund that they can actually go in and dictate some of these things And I think we're starting to see that happen and I think that that's really really important I think what we see our our role at Sirdna with this hundred million dollars not only for our endowment, but it's also for We think about pension plans and and and traditional capital investors How do we seed fund managers that our mission and values aligned that are really thoughtful in the way that they execute their strategies? That one day a pension plan could say oh yes This is a woman of color fund manager investing in communities of color Focusing on entrepreneurs of color and she's able to generate competitive returns And it is based in community and thoughtful in that way is really really important I also think about I mean Andre and I've always talked about sort of the bottom-up approach I think the thing that you know we think about democratized decision-making The thing that concerns me is how is this scalable? We're dealing with trillions of dollars of assets and decisions that have to be made How does that actually come to practice? I think it's a great idea that we should be experimenting I think philanthropy should be leading that experimentation of what that actually looks like It may be that this will be a subscale part of the of the system But I think that this is where What does that actually solve for the other conversation that I always have is like so if we democratize decision-making? That doesn't mean all the bad things are gonna go away Right, and I think that's something that we need to fully appreciate that each community That's making decisions will have to think about the trade-offs And maybe it's a good thing that the community is ultimately making the decisions around the trade-offs I can see that but ultimately the sometimes the language that I struggle with is that there are going to still be trade-offs You know and and we need to be cognizant of that and continue to be aware of that Two quick things One is that we need to be a lot clearer on the evidence of what we're doing And I think that goes through to Shraib's point about the trade-offs, right? We have developed a bunch of tropes that we haven't really proved out and we say a bunch of things We should probably at this point get a little bit more more rigorous on on the evidence and on the theory of change that we that we have for it So absolutely agreed on that part. Let's now get into this like facile Type of dynamic around what what this future could could look like the other is on your issue of scale, right? Whether we actually get to a certain level of scale I Don't think it's necessary for us to get there if I really want to get into like what is the role of the impact investors? I think it can be just you know Your job is to show that something different is possible and it's attractive for whatever reason because it's solving problems because you know Your friends think is cool because you're still getting your returns But it can be done and then that's where the policy piece would would come in right? We're not going to get to this kind of structural change just one impact investor at a time, but if you want The political forces the democratic forces to say oh, yeah, we need to do something to change the economy We have no idea what we could do. Okay. Well, let's look at what has been done right the impact investors can play their role as kind of the the proof of concept for a different style of Style of investing now that will work though only if we're not perpetuating that the structural Problems around decision-making around governance around wealth extraction, right? Are we as as an urban Ami always says right? Are we really finding who wins and who loses that through our investments? That should be the first question for the for the impact investor So when you're making the investment again, are you thinking oh great now? The children of Bangladesh from the beginning example will have water or have I created a proof point for what this broader? Transformation could be like and that's why we get so excited about you know the multi-stakeholder models The steward ownership models anything that moves away from the shareholder primacy That's hard right that's super inconsistent with the idea of beating the market as as an investor and Keeping constantly like you know all the all the governance rights that you that you can have that is not how we're going to Design and show those proof points that can then be taken on as a as a broader policy framework I think that I mean and I share your view that I think a stakeholder approach is needed and it's appropriate But I think that ultimately for me that that is still in service of ultimately The shareholder right because the reality of it is as you look at the strike that the GM is facing right now And the billions of dollars a day. It's costing them. You look at Purdue Purdue pharmaceuticals. That's privately owned Look at what's happening with that Johnson and Johnson all of these behaviors That are ultimately they're coming to account and so I think as an investor that those things are actually important We need all of those people at the table because part of it is we need those voices represented But it also puts accountability at all of all parts of you know We want labor at the table because labor has to think about The workers and their issues and challenges but also by sitting on the board for example It's what is right for the business in terms of what makes sense that this is a tension that I think that we need Everyone to be sitting at the table and thinking about and experiencing and then that's where the trade-offs and the difficult conversations will happen of what's best But I do think that's ultimately in service of long-term value creation and potentially beating the market I mean that's just my belief and again to your earlier point Do we have the data points to prove that no But this is one of the things that that we try to think about and to your point about scale I think one of the things that you know This is our fundamental thesis, especially out of our high-risk capital We're seeding a lot of fund managers of color and I'm very clear that I want them to look market because I want Impact America fund run by Keisha cash just to be supporting entrepreneurs of color But I want she's raising a 50 million dollar fund right now When she gets to 100 or 200 million dollars where it's viable successful and she can attract capital That's where we're gonna see change around the wealth and wealth effect to take place in communities of color And so we have to think about some of those things between the short-term medium-term and long-term in those strategies And that's how we're thinking about it. So just a one more question. Maybe we can open it up to the group I find myself wondering about the role of regulation When you look at the business round table again one particular view of that is That it's a kind of nominal self regulatory act as you see the pitchforks at the palace gate And understanding that the realities of the world are Finite or changing and Is this kind of business? tidying up squaring up In the anticipation of some sort of regulation in Washington. We're starting to see some sec commissioners Talk about different aspects of accountability. We've had some Congressional hearings on disclosure around ESG which you could imagine is divisive on party lines But there have been other aspects that are not divisive where folks understand that Transparency would be better. So what is the role of of regulation? Do you think in creating a more truly perfect market? well, I I think that the regulation will follow and I would have never thought I would say something like this But like really a narrative shift or a changing consciousness around what what finance is supposed to do with the economy right we we've taken as an article of faith shareholder primacy shareholder capitalism and And I go back to like Marjorie Kelly's book right the divine right of capital where she makes the analogy to you know When you had the king and you had the aristocracy and then you had all the little peasants and the peasants were like well Again, God says that you know it is a system. It is what it is, right? And then eventually there are those little cracks and and the entire structure gets gets questioned Right and as the party as I understood trade. He is not questioning Right the the idea that the that the investors still get to make the decisions just because they put in the equity capital Let's say in in that particular case. So the the regulation There will be no political mandate for it unless This this kind of early like pitchforks at the gate leads to like that that the grounds well from From all sorts of people saying like yeah, sure. No wait a second We've been living in this like completely insane dynamic for for for quite a while, right? We need to break out of it and then that will that will come along So I think the the BRT statement is that it's awesome as that as that opening, right? We should not be sitting there hand-wringing about like are they really honest or is this really a fake or a CSR type of doesn't matter they've they've opened the door for a conversation that was not happening before and Can we have a really sophisticated strategy a really sophisticated theory of change about how we're gonna step into that and sequence a series of moves so that It becomes inevitable that there is some sort of political will for example to Actually write this multi stakeholder principles into the charter of a corporation. I Mean I agree. I think regulation is an important part of this I think one of the conversations again within certain that we talk a lot about is that we need sort of government civil society and Sort of enterprise to all play an equal and balanced role and hold each other accountable in some ways And I think that regulation is going to be important and I think there are plenty markets out there like Germany for example that has taken a bit more of a Multi-stakeholder approach than we have so I believe that but I also look at the reality is from my perspective It's just like I always find regulation to be the lagging indicator Because either the problems have gotten so dire or so bad And it is ultimately about political will that that drives some of these things I do agree that this is where the role of philanthropy the role of social justice people in the social justice movement it's really experimenting and developing the new models because Regulation needs something to react to or respond to To enact some of these changes And I think that that's part of the conversation that has to take place But I I do believe in regulation. I think we need regulation, but I don't think regulation is going to lead us there All right folks, what are you thinking about what's on your mind? And I would say that this topic in particular will lend itself to a soapbox So we're asking folks to share your thoughts, but in a very kind of tidy format Who's feels passionate and terse at the same time Yes, the man with the microphone Hi, my name is Tim Dunn. I work at a firm run a firm called tear-off investments My question though is about at this for thinking about the impact investment world We talk a lot about the positive impact side of the equation and the things we can do to make positive impact and Too often we're all and I'm also chair an investment committee of a foundation We're in the same boat. We're not necessarily think about all the negative impacts the primary part of our portfolio endowments are having and How are you guys looking at your the base of your the bulk of your investments and understanding the negative Implication impacts through on the environment society That's embedded in most of the investment products. We're all using and where are you in that process of? Understanding that getting transparency on that for yourselves and then thinking about how to shift So I'll start wait even with our impact investing portfolio in terms of just thinking about negative Externalities I think that one of the things that we talk about even in our impact investing portfolio is we take impact risk Because we are so focused on the positive and we believe that that impact is always truth and the impact is there I think some of the work that we're doing is first acknowledging that we take impact risk that we don't know if the impact is going to come to fruition or the Negative externalities created by the positive impact that we're creating outweigh that so that's the frame that we've started with our impact investing Portfolio and so we acknowledge that moving in I think we're going through a process right now because it literally our November board meeting Is coming up and we're thinking about what the future of impact investing looks like at certain rights just a philosophical question We're three years in we've moved about 60% of our capital How do we fully go deep dive into what is in the endowment? What should be transferring from the mission-related investing portfolio into the endowment? But that requires first for us to go through and say what is in our private capital portfolio? What is it actually doing the same thing on the public side? So it's understanding who the fund managers are the implications of that We think that that we have to do that exercise for us to fully understand How do we move some of our mission-related stuff into the endowment because what is the positive stuff that can be in there? How are they competitive from a risk-reward perspective as well? Like we have to look at it through that entire framework But this is going to be a 12 to 18th month exercise for us to go through with our board and our investment committee and the staff To really understand what that looks like, but we're at the beginning of that journey But I think it was important for us to move that hundred million dollars because I think we were still asking the question like is there investable opportunities out there and I think everyone will say yes There are but people that don't show up to these conferences don't think about this stuff all day long Continue to pontificate if these opportunities exist and it's exciting for us because some of our mission-related investing portfolio on the public side Is outperforming some of the stuff on our endowment, right? That's an exciting data point for us I run through the hall screaming that But I think it's an important reminder that having those proof points is now forced this conversation right Yes My name is David lids. I run street. Well, we are a Street-level real estate renovation. We just we renovate distressed housing in hard neighborhoods You just brought up the comment that there's the idea of government regulation that would sort of make a ESG in this sort of street level of social enterprise We would call that maybe double bottom line and it's just hard for me to imagine what that regulation would look like It's hard to imagine a federal regulation that would account for and Mandate impact Although I'll say it seems like we had an opportunity to have this discussion with the qualified Opportunity zone legislation and maybe some of the work was done, but then it was scrapped So it's hard for me to even imagine where this would go and you mentioned that Germany's already done it So if you'd like to comment maybe on what that would look like I feel like opportunity zones are like a heat-seeking like wherever it'll like Pop out wherever it can. I'm happy to talk about opportunity zones and you're right that For parliamentary reasons the impact aspect and reporting accountability It's shipped out of the statutory language And so the organization that I run the US impact investing alliance and partnership with the New York Federal Reserve Bank and the Beck Center at Georgetown has been working to set a private sector voluntary standard for impact all the while trying to Engage with regulators and members of the administration to understand how the legislation can have some of that accountability baked back Back in and if it does at the federal level or even at the voluntary level It's really designed for a kind of regulation or self-regulation of private funds That are doing this sort of work and underinvested and disinvested communities So that is you know potentially one example on the private side I think most of the regulation and potential regulation that I was talking about would be around regulation of public companies and disclosure Yeah, I wouldn't want the the regulation Conversation to go to like oh, it's this central government going to dictate how many children I'm supposed to save Or anything. I think there's just like one very simple regulation that should be put in there That said you know all the stakeholders that are affected by any type of investment should have a voice and a governance role Period y'all go out and figure out how to how to do that who are the stakeholders? How much of a vote do they do they get and whatnot? It could be as simple as that right you as investors are having an impact on all sorts of stakeholders the workers the Contractors supply chain customers big and small and yet the only votes are from this one ingredient That is the that is the capital right the one regulation. I think would solve 90 percent of our problems All right, let's take it. I just want to add that but the capital still represents Individual people at the other end. I think we have to the myth that it's these like five men sitting in a room They they and again we have to hold them accountable, but they ultimately are representing pensioners 401k plans and and so I think that I just I want to highlight that because I think that that's something that we continue to Forget the second thing that I just wanted to your question about impact I think we also have to step a little bit larger like what is impact right some of it I think I agree with Andre It's sort of is it just we want a multi-stakeholder approach because we think that's going to lead to better decision-making that Takes into account people planet and community right that is the impact It's not necessarily saying this many children are getting this type of lunch By every single corporation right I think that this is where we have to realize the limitations of what government can actually mandate But also again, let's recognize the limitations of what capital can actually do or investment capital Very quickly. I use that trope around like ultimately We're all investors and you know really the big pulls of money are from are from the workers But I don't think it's that far off from the five men sitting in a room that you're that you're talking about Because the decisions that are being made are you know with the view to the to the return So even at the at the labor pension fund level you see this absolutely ridiculous Anti-worker type of investments and you say why you invest in interesting that is completely opposite to the to the well-being of your workers Well because they will maximize their pension You know returns down down the road, you know a couple of them might die today But the ones that like survive will will be able to get a better pension And because there is this like very strong kind of intermediation in all the steps So you don't have individuals thinking about other individuals, right? That's the beauty of the place-based work You have a spreadsheet looking at another spreadsheet looking at another spreadsheet and that's the way that that capital gets allocated Like okay, I'll slush off one column, you know spreadsheet kind of still looks the same So yes, it is workers capital by and large or in the case of sovereign wealth funds, you know citizen capital But that's not the way that it's being allocated. It's not being allocated in the best interest of those I would say in this moment in time That's where I think within the pension plans and the ones that I've been you know Been able to sit in a room and have them listen to their conversation that you're starting to see that change And I think part of it is going back to the earlier point of how do we inform and understand The actual power that we have as individuals at exercising that and saying you know what we are not investing in this private equity fund Or we're putting a mandate of what are your policies around? Workforce and and and so on and so forth. So you're starting to see that happen But I think part of it is the education and realizing we actually have agency We have through years been reminded or told that we don't and we've become that's become truth in some way So let's see if we agree on this one That to the extent that you as an asset owner Allocator are sitting on this power right that comes from just having the the capital One approach could be instead of just investing in best-in-class fund managers that are out there Actually saying no, I will look for that Delta I would look for where I can deploy my power to improve the practices of a particular fund manager, right? I can anchor a fund and it will put all sorts of conditions on what I would like them to do as Opposed to just being like a smaller fish in this funds that I really think have this awesome practices Right that the kind of Delta approach to the impact could be a very interesting way of transitioning while you still have that power That is our PRI strategy Okay So that that's I mean I was on a panel yesterday talking about anchoring funds And I think that's some of the stuff that we think about because we think about even from a Delta perspective We're supporting fund managers that see things differently because we think that they're going to recognize opportunity in a different way And we think that's both better for for community people planet But also for generating returns and we're willing to take that risk with a pool of capital that we have Kresge Foundation around opportunity zones, but You know tens of millions of dollars of work money to work as guarantees And wrote in community covenants including community representation On advisory councils and other things so they were basically impact or community covenants baked in and use the downside risk mitigation theoretically to to benefit Already good actors in terms of impact funds but trying to influence their behavior further and crowd and other sources of capital I think we have time for one more comment from the audience. Do we have a a lady comment? I Any ladies like to speak women. Yes. Hello, and I just wanted to get back to the definition of capitalism Especially since the title was the future of capitalism it's an economic system where you mostly have private ownership of capital goods and Earlier in the discussion you were mentioning like who are the best allocators of capital and does it differ in all among sectors? Does it differ on different things? That's a big question I guess but just wanted to circle back to the to the title of the of the panel That is a big question. I mean, I think from my perspective I think when we think about allocating capital and I think that this is where we will agree This is where you want sort of even in the way that capital is allocated if you take a multi stakeholder approach That the way capital and where capital flows will be more thoughtful because it's taking into account all the needs wants and desires of different people sitting at the table What that system looks like and how that's executed? I Don't have the answer to that But I do believe I mean this is just a fundamental belief that I have and I think we're starting to see that even work in just pension plans And the way that they're governed by having members as trustees of those pension plans and you're starting to see those conversations take place What that looks like more broadly? Yeah, I think that's something to think through So we have just a minute or two left And I'm wondering if either of you have a call to action to folks in the audience Those will who want to subvert from the center those who want to subvert from the margins Or on any other topic related to Capitalism and power I think for me and I'm coming from again an investor perspective I think it is about taking risk And it is taking risk with your capital I think that this is one of the things that When I joined CERN it was one of the first points that I made is like shouldn't we with some of our portfolio Be taking a significant amount of risk to prove where things do and don't work be okay Not only with financial risk, but also impact risk. It's interesting to me how much Impact investors are like we're willing to take all the financial risk in the world upside-down side But we're not willing to take any impact risk, and I always think it's interesting because people talk about we want to change systems We want to change the way capital flows. Well, that is only done through taking both financial and impact risk And part of that is learning in and and for me and what I tell our board and our investment committee is a mission-driven Organization we have to be able to look at things and say the negative Externalities outweigh the positive and this is not something that we want to continue to do in the future And that's a really tough Conversation to have but if we don't have those conversations. I'm not a hundred percent sure who is I mean I would say I mean the first is and there's like a Historic so-called conversation just be damn clear and damn honest about what it is that you're wanting to do and how far you're willing to go, right? Bless anybody that is doing something really good out there, but let's be clear Are you interested in the systemic change? Are you interested in doing things a little bit better? Are you interested in getting alpha from you know investing in some under Explored under discovered market great like you fit somewhere on the spectrum But let's be clear if you are or you're not looking for a structural systemic change If you're looking for a more structural change because you think that the current system is not Sustainable then let's move away a little bit from the emphasis on the on the what right the the sector the thematic type of Approaches and start really thinking about that plumbing right? How do you show up as an investor? What is the fairness of the terms that you're putting out there who is bearing the risk? Who is in the best position to be to be bearing the risk not just thinking about it from well? I have the power so I decide where I want to put that risk But really thinking of it as this kind of structural type of considerations that can be tweaked right just because you can punch the risk Onto somebody else doesn't mean you should be doing that Gentlemen, thank you so much audience. Thank you so much