“Some people say impact investing is a lot like high school sex. Everyone is talking about it. Very few people are actually doing it. And those who are doing it, aren’t doing it all that well,” says Abigail Noble, chief executive of the newly formed organization, TheImpact, in a TedX talk.
The quip gets audible chuckles from the audience, some of whose members are impact investors themselves. The message hits home. It’s also the reason why TheImpact was begun.
Founded in New York City by a younger generation of wealthy individuals and inheritors, including Justin Rockefeller, Josh Cohen and Liesel Pritzker-Simmons, The Impact’s mission is to corral high-net-worth individuals and have them pledge impact investments—hence the name as a play on “(im)pact.” It aims to be a collaborative initiative, tracking social and financial performance and sharing that data with others who have made “the pact.” The whole idea is to increase the probability and pace of solving social problems by improving the flow of capital to businesses that have measurable social impact.
Although it is seeking a selective (the group is by invitation only) yet broad constituency, TheImpact is zeroing in on Giving Pledge members to put their dollars into impact investments.
The Giving Pledge is a grouping of the world’s wealthiest individuals and families who commit to giving more than half of their wealth to philanthropy or charitable causes either during their lifetime or in their will. Warren Buffett, Bill Gates, Mark Zuckerberg and a slew of other well-known billionaires have made the commitment.
The natural follow-up question, of course, is where will all those dollars go? If TheImpact catches on, fortunes will migrate into investable structures that foster social and environmental actions.
There is an art to dealing with the one percent of the one percent. And Noble is an experienced handler. She was poached from the World Economic Forum, where she ran its impact investing program. The WEF is famed for its annual meeting in Davos, Switzerland, where global power players congregate to discuss and address the world’s ills and opportunities.
At the WEF, she worked on a diverse set of issues, from climate change to youth unemployment. Largely, though, she was responsible for helping social entrepreneurs across sub-Saharan Africa and Latin America scale their impact to things like access to healthcare, education and energy. At Davos, she even created a game where in order to win players had to achieve the highest social impact and financial return. (It was a surprising hit, especially among the hedge fund managers and bank CEOs in attendance.)
Fun and games aside, Noble is soberingly serious when she discusses the path to a positive future promulgated by impact investing. In an interview with Private Wealth, decidedly offline (outside in Central Park), she spoke of her new role, the role of TheImpact, and the potential for impact investing.
PW: Can you tell us about TheImpact?
Noble: The Impact is a nonprofit or a 501(c)(3) started two years ago by Justin Rockefeller and Josh Cohen, two good friends who said that there's a giving pledge route, of giving away your money, but what about a pact or a pledge, about what you do with the rest of your money? So The Impact, it's a play on words, of Impact, is a pact to make more impact investments, track your social and financial performance and share what you learned with others. It's a network of family offices who commit to make more impact investments and want to do it more effectively. We're providing them the knowledge and the network and all of the tools with which they can make more effective decisions on impact investing. Some of our co-founders are just incredibly visionary individuals.
PW: For example?
Noble: Liesel Pritzker Simmons, who says, "How I invest my money has moral consequences." One of the things we talk about a lot is that every investment has impact—positive, negative and neutral. The more that we can increase our positive impact and decrease our negative impact, the better the world will be. One of our other co-founders, Justin Rockefeller, talks about the fact that the world's economic, environmental and social challenges affect us all. And all of these regional or local problems have global implications and vice versa. Things like climate change and poverty.
PW: How old are these guys?
Noble: Liesel and Justin are both in their mid-30's, as is Josh. They're kind of on the line of millennials. And millennials are very interested in socially responsible decisions and a greater connection between the decisions that we make and the impact on ourselves and the impact on others, on future generations. It's not just millennials. Jean Case and Steve Case, who started AOL, are also huge supporters and are early co-founders. We are really thinking about how we can get more people into the impact investing space, and more people who are thinking about the connection between our values and the value that our investments create. And really investing in entrepreneurs and businesses that, at their core, address social [and] environmental problems. … The next generation, increasingly, is looking at how do we align our values and thinking about things that will increasingly affect quality of life. Things like climate change and rising sea levels and increased weather disturbances. There are even studies that are coming out now that are linking the crisis in Syria to climate change.
So, there's no way that we can remain as silent as we have been in the past, saying with one hand I'm going to be focused on my investments and with my other hand I'm going to be focused on my philanthropy. You need to say how do we use all of the tools in our tool belt and leverage all of our influence, assets, to help create the world that we want to create?
I'm saying that with a caveat. This kind of change is not easy. It's going to take time to move from having no exposure to impact investments to having some, and from having some to more, because when you divest of something, especially if you're a large shareholder or stakeholder, it will have an effect on the capital markets. It will have an affect on the stock price of something that pension funds might hold. So there's a need to take into consideration the whole ecosystem and over time, look at how you can move from a one percent exposure to two percent, and to five percent. These are millionaires and billionaires.
PW: So it's a lot of money.
Noble: Yes, it's a lot of money.
PW: I know that the ethos is there of "OK, great. We want to create impact, and we all want to pledge part of our impact," but what's the criteria for joining?
Noble: It's by invitation only. It's really designed to be very much a peer network. And part of that is we're looking to our co-founders to help us identify the right people to engage. The first thing that any potential member needs to do is to make the pact. Which is quite simple. Three things: make impact investments, if you haven't made any, or to make some, if you've made some, to make more.
PW: What's the criteria? As you said before, anything could be considered an impact investment.
Noble: I didn't say anything could be considered an impact investment. I said all investments have impact, right? Impact investments have the intention of creating social or environmental positive returns. It's not only about financial value creation. The technical definition of an impact investment is an intentional strategy to target for financial, social, and/or environmental returns that are either actively measured or measurable.
PW: Gotcha. So what's the ultimate goal?
Noble: To get a lot more capital into things that have a positive social and environmental impact. To increase the probability, accelerate the pace of capital going into businesses that have the potential of solving big societal and environmental world problems.
PW: Thank you.
A pact of that kind could indeed shift the goal of finance. It could position capital for good. And with the weight of millennials leveraging the trillions of dollars they stand to inherit, impact is certain. At TheImpact, the movement has already begun.
To find out more about TheImpact and its mission, go to theimpact.org
