Kusi Hornberger
Kusi Hornberger is a Partner at Dalberg Advisors in Washington, DC, where he leads its Finance & Investment Practice. In this role, Kusi has led more than 200 advisory projects on a wide range of topics related to blended finance, financial inclusion, impact investing, impact measurement and management, and innovative finance with leading donors, development finance institutions (DFIs), family offices, foundations, and private investors around the globe. Kusi recently authored the book titled, Scaling Impact: Finance and Investment for a Better World (Palgrave MacMillan, 2023).
What we learnt
During the interview Kusi Hornberger emphasized the opportunity cost of not engaging in impact investments, which leads to suboptimal capital allocation and a failure to achieve collective goals. Kusi explained that impact investing involves two distinct factors: clear intentions to create positive social and environmental impact and a way to measure performance against those intentions. He also highlighted the importance of developing a common language and framework to facilitate understanding and collaboration in impact investing.
Kusi stressed that impact investing should be accessible to everyone from the top of the capital stack to the bottom, and institutional investors have a crucial role to play in driving its success. He suggested encouraging institutional investors to create markets that demand impact strategies, report on impact, and incorporate impact considerations when allocating capital. Additionally, Kusi emphasized the need to expand beyond Environmental, Social and Governance (ESG) risk mitigation strategies towards ones that take more intentional and strategic approach to creating impact.
Kusi believes that the government can play a critical role in impact investing by regulating, taxing, and providing public services to ensure that externalities are considered by private investors. He also mentioned the potential of technology in reducing the friction cost of connecting investors with impactful projects and lowering the transaction costs of making transactions.
In summary, Kusi underscored the importance of collaboration and the need for a common language and standards in impact investing to help them to scale. He believes that institutional investors, governments, and technology have vital roles to play in promoting and driving the success of impact investing.
If you had a magic wand…
What if we could use technology to dramatically lower the cost of connecting those who want to invest with impact with those who are actually doing impactful things on the ground in difficult places in need of capital?
What if we could have a Chief Purpose and Impact Officer for a large pension fund in India or China – how would that change the way the future of capital will flow and to what ends?
Key quotes
‘Impact is about an intentionality to create a positive measurable contribution to the world.’
‘At the beginning, there might have been the right intentions, but over time, the financial services ecosystem have not been designed or regulated in a way to respond to or consider social and environmental considerations sufficiently.’
‘Information about impact in its truest form is disaggregated. However while many metrics help us to understand nuance they don’t allow for an easy way for people and companies to understand and compare them.’
‘if we had a free market that incorporated all those negative externalities, we would be beautifully aligned. But the reality is that we're not there. We don't incorporate the true costs, and we don't have perfectly free markets.’
‘Government has a role in society. If we, as a society, believe that certain things are not working and externalities are not being properly priced, then it's our role to elect or vote, if you live in a democracy, and push governments to make sure that those economic externalities are being considered.’
‘Even if you considered the largest estimate of the size of the impact investing ecosystem, it still accounts for less than 1% of all investments. It remains far too small.’