In the world we inhabit today, our global economic system is failing the majority of people. It's a system characterized by instability, inequality, and a profound lack of dignity for many workers. We live in a world that often fluctuates based on the whims of the powerful, leading to widespread insecurity and hardship for countless individuals and families.
But imagine, for a moment, a different world – a world where our economy is built on the foundations of stability, equal opportunity, fairness, and respect for all. In this world, we've created a system that offers everyone the chance to succeed, regardless of their race, age, sex, disability, religion, financial capacity, or social power. This is the vision of a truly just economy.
Recently I was asked, “Why would those who care about impact want a financial return? If impact investors say they aren't in it for the money, that they just want to see good work get done, and a social/environmental return (vs a financial one) why not just give free money with no expectation of pay back?”
I think the question of how much financial return an investor expects is a fair question. But looking at it as an either/or (profit or impact) isn’t true to the economy that I described above that is more fair to the communities, workers and the earth. In this economy that I am working toward, impact investing is about more than just moving capital; it’s about shifting culture and power.
Imagine a world where capital isn’t considered “impact” or “not” but values aligned or not. ALL investing (granting, stocks, venture capital, etc.) has an impact. It may have unintended impact, it may have negative impact, it may have positive impact, but ALL investing has an impact. “Market returns” have exploitation baked into the return and for too long we have ignored these parts of a market (or above market!) return. By normalizing a more modest financial return alongside larger positive impact on people and the planet, people will be able to benefit from the use of their capital while making our economy more sustainable and less extractive.
Imagine a world that has realized that philanthropy alone cannot solve our most pressing global challenges. The scale of issues like climate change and poverty requires a new approach. By reimagining impact investing, we've attracted more capital to social and environmental causes, addressing these issues at a scale that was previously unimaginable. Ideally this approach will democratize the ability to invest in positive change, allowing everyone to contribute to and benefit from investments in their communities and the causes they care about.
Philanthropy should not be the only space that positively impacts the world. Wealthy people should not be the deciders of what gets fixed and when and how. Everyone should get a say in what is invested in. It shouldn’t just be “accredited investors” that can make a return on investing in the climate or their own community infrastructure.
When investors are the only stakeholders that matter then the impact is only what they want. And if they ONLY want a financial return then people and the planet suffer. And if they want NO financial return then often communities and environments are still extracted from but the outsized returns go to those in power, yet again.
What if we lived in a world where the economy works for everyone, where sustainability is the norm, and where every investment – whether large or small – contributes to building the kind of society we all want to live in. In this new world we’ve imagined, our economic paradigm has shifted away from shareholder primacy to a model that considers integrated returns – accounting for impacts on people and the planet alongside profits. This change has empowered all individuals to have a say in what gets invested in, breaking down the barriers that once limited participation in shaping our economic future.
In this new world, we've created an economy where capital is aligned with values, where impact is considered in all investments, and where everyone has the opportunity to contribute to and benefit from a more just and sustainable system. We've moved beyond the notion that wealthy philanthropists should be the sole deciders of what gets fixed and how. Instead, we've built a collaborative, inclusive economy that reflects the diverse needs and aspirations of all members of society.
This is not a utopian fantasy, but an achievable vision of what our world could become if we commit to reimagining and reshaping our economic system. This is the promise of a truly just and sustainable economy, and it's within our power to create it.
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