October 29, 2021
Last week, our Chief Impact Officer Sandra M. Moore spoke on a panel at the Milken Institute’s 24th Global Conference, an annual convening of global leaders in finance, health, academia, media, and philanthropy. This year’s conference, centered around the theme of “Charting a New Course,” reflected on the ways in which the public health, economic, and social upheavals of the recent past can inform a more hopeful and prosperous future.
Sandra’s panel, the Tradeoffs of Impact Investing: Double Bottom Line vs Corporate Social Responsibility, discussed the intersection of private capital and social impact. She was joined in a lively and engaging discussion with Oliva Albrecht, Global head of ESG at The TCW Group; Gordon Fyfe, CEO and Chief Investment Officer at the British Columbia Investment Management Corporation; and Joanna Reiss, Co-Lead of Impact at Apollo Global Management. The conversation was moderated by Aron Betru, Senior Fellow at Milken and Chief Strategic Officer/Chief Operating Officer at Trident.
Here are three key takeaways from the robust discussion:
(1) Impact investing is not necessarily ‘concessionary’
Impact investing is often implicitly viewed as ‘concessionary’ in the sense that the financial returns of impact funds are expected to be lower than those of traditional, non-impact funds. Yet growing evidence from the industry suggests that this dichotomy between profit and purpose is often false. As Sandra and her colleagues on the panel stressed, when impact investors focus their investments with clear purpose and intentionality, the dual goals of strong financial return and meaningful social impact can both be realized.
Indeed, at Advantage Capital, we’ve managed to target this sweet spot through small business investment in underserved markets for nearly 30 years.
(2) More tailored metrics are needed to define impact goals and outcomes
While there’s no doubt that impact investors often achieve double-bottom line returns, further specificity is needed to define and measure this impact. Within the broader umbrella of Environmental, Social, Governance (ESG) investing, for example, the ‘social’ component lacks the same kind of robust lexicon and measurement criteria that exist for ‘environmental’ and ‘governance’-focused investments. Given that ‘impact’ can mean disparate things to each investor, developing more industry-wide, targeted impact goals and measurement criteria will be crucial as the industry continues to grow.
(3) There’s still plenty of growth to be achieved in the impact space
Finally, although impact investing has seen burgeoning growth in recent years, it still remains a relative niche market: while the $4 trillion AUM in the impact investing industry is far from inconsequential, it still represents only a small fraction of total global assets. Going forward, Sandra and her fellow panelists are optimistic that impact investing, with the right mix of drive, intentionality, and creativity, will become an asset class in its own right, capable of effecting measurable social change.
Advantage Capital was honored to be included among such an impressive consortium of industry leaders driving meaningful change. To hear these takeaways and more, watch the full recording here: https://milkeninstitute.org/video/tradeoffs-impact-investing
