2019 11 Impact Investment Summit – Asia Pacific

Introduction

  • Thank You
  • Personal Intro
  • The title of my presentation is: System Change – forced on us or enabled by collaboration and emergence – the choice is ours
  • Preview content
    • I will make the case today, that the existing systems are not serving us anymore, particularly the financial and economic system
    • I will make the case today, that incremental changes are not going to be enough, that dealing with the symptoms is not going to be good enough, that extrapolating out linearly is not going to be good enough to avoid a major and radical discontinuity with unforeseen or dire consequences for humanity and the planet
    • I will make the case today that we will need to re-conceptualize and re-imagine our economic and financial system and that we need to elevate the consciousness and awareness of humanity in order to let the emergence of the new system play out
    • And finally, I will make the case today, that we have a choice – that we don’t need to be victims of this transformation!

Main Content

  • Current problems
    • Over the past few weeks and months, we have all seen the demonstrations and actions taken by young people, indigenous people, disadvantaged and poor people because their interests and livelihoods are trampled by big money and political leaders who don’t serve them
      • Hong Kong
      • Hawaii
      • Chile
      • Greta and climate warriors
      • Extinction rebellion
    • What do these incidents have in common?
      • These are all powerful reminders that the current system does not serve many people, particularly the disadvantaged and poor
      • These people don’t see a future for themselves and they are ready to challenge the establishment and fight
      • System science and experience has taught us that systems change under pressure; and they don’t change without pressure!
      • Right now, the pressures are mounting
      • At this point in time the question is not if, but when the system will change
    • Much of this expression of despair and discontent is caused by the current economic and financial system which today only serves itself, and not humanity and the planet
      • $81T in Institutional capital (pension funds, insurance companies and sovereign wealth funds) is not aligned with creating systemic solutions, but is perpetuating and intensifying the pressure points of poverty, injustice, inequality and climate change.
  • But there is a different system emerging
    • It is called the impact economy, where impact businesses, impact funds, impact entrepreneurs, and impact intermediaries are creating a new system, a system that puts positive environmental and social impact at its core!
    • This new system will replace the old philanthropy, which is creating more dependencies and corruption as opposed to contributing to systemic solutions.
    • This new system will replace the old form of capitalism, which only cares about maximizing profits at the expense of social and environmental impact
    • This new system is still tiny, but is gaining momentum
    • We can all choose to be part of the new system!
  • Hook
    • You all have a bank account …
    • You all have a retirement account …
    • Many of you have an investment portfolio …
    • And we are all consumers …
  • Let me now go a little deeper into why the ‘normal’ impact world is not sufficient to change the system, and why we need to co-create what we call the deep impact economy. I will talk about 4 challenges and opportunities.
  • First: Positive Screening versus Deep Impact: Big capital is positioning itself and its definition of positive screening for environmental, social and governance criteria (which is called ESG) as impactful.
  • This is dis-ingenious at best and self-serving. It usually amounts to ‘impact washing’ and is confusing to the marketplace. It allows big capital to continue maximizing profits without addressing the need for more systemic and deeper change. Two examples of this would be good ESG ratings for some weapon manufacturers or for British Petroleum in the oil industry.
  • Deep impact investors are changing the question from what are good management practices like environmental, social and governance criteria to how businesses can meaningfully contribute to the well-being of people and planet.
  • Second: Treating symptoms versus root causes: Most impact players are addressing the symptoms of big systemic issues like inequality, social justice, climate change and poverty, as opposed to the root causes.
  • A great example of that is the current debate about how to reach the United Nations Sustainable Development Goals by 2030.
  • Most impact funds, impact enterprises and impact investors are mapping their investments to these goals. Many optimize for 1 or 2 Sustainable Development Goals, however, sometimes at the expense of others. For instance, reaching the goal of ‘decent work and economic growth’ with non-renewable energy would not only jeopardize the goals of ‘climate action’, ‘life below water’ and ‘life on land’, but it would make reaching these goals very, very hard, if not impossible – certainly not by 2030.
  • Deep impact investors take a holistic and systemic view, they are addressing the root causes of these big systemic issues. They see the connection between poverty and climate change, between gender equality and well-being. Many of them also work with governments to push for resource taxes like carbon taxes and taxes on the super wealthy to start addressing inequality and social justice.
  • Third: Market-rate returns versus appropriate financial returns: The impact economy requires new and different ways of being measured.
  • Many impact players get stuck in social-constructs like ‘risk-adjusted’ or ‘market-rate’ returns, ‘modern portfolio theory’ and the ‘invisible hand of the market’, which are all part of the old paradigm and are clearly inadequate to address the systemic issues of our times. All impact players – even deep impact players – are forced to compare themselves to meaningless benchmarks – as current benchmarks are composed of investments that they could never invest in. (If you provide health services to the bottom of the pyramid, there is NO benchmark that you can compare yourselves against, so-called market rate returns do not have a meaning – other examples)
  • Deep impact investors are redefining the question and ask: what is the appropriate rate of return for the impact they want to achieve.
  • Many deep impact investors are working on developing new investment vehicles like social-impact bonds which explicitly tie financial return to impact – example.
  • Many deep impact investors are working on using modern technologies like block-chain and artificial intelligence to tokenize impact. This is a major opportunity for moving beyond the venture capital based investment world – where only the general and limited partners benefit – to a model where all stakeholders benefit.
  • Fourth: Ignorance versus elevated human consciousness and awareness: Humanity’s trajectory is to a large extent a reflection of the state of human consciousness.
  • The transition to the deep impact economy will require an elevated level of awareness and consciousness. The responsibility of elevating human consciousness is ours.
  • My purpose is to help evolve human consciousness to be in harmony with the universe.
  • We deep impact investors see impact investing not as an intellectual exercise, but as an expression of who we really are, as an expression of the change that we want to see.

Let me conclude

  • We all have a choice to make:
    • We can either be the victims of unprecedented changes forced by climate change, inequality, social-in-justice, in-equality and poverty
    • Or we can all become courageous leaders who step up to the challenge of systemic change, who question the status quo, and who immerse themselves in deep impact.
  • The choice is ours!
    • Listen to your inner voice – it will guide you on this exciting journey.
    • And commit to the mindfulness work necessary to elevate humanity’s consciousness to co-create the future that we know will emerge.
  • Thank you very much.
Posted in Keynote Notes.