Battle between logic and emotions
There is a tension between a more logical focus on risk mitigation, and the emotional need to create impactful work – finding a way to foster a connection between those could open doors of impact investment to many.
Looking at data from a different lens can bring awareness and alignment
Data is a powerful tool that can be used to pave a way to look at situations from a different perspective – an unbiased pair of eyes that pushes the conversation away from well established patterns, making room for new ways of doing, thinking and approaching situations.
When working with impact, data becomes a powerful communication tool apart from it being a way to measure things. As the field evolves, the need to work with, understand, challenge and be hold accountable with data becomes ever more important.
“I tend to think it's probably not a lack of entrepreneurs, it's the lack of investors willing to take on a certain kind of funding at a certain part of the capital lifecycle. Basically, everybody is kind of a line of people waiting at the other end for the ferry to arrive or end. But rather than being willing to go upstream a little bit, they're just sitting and complaining that nobody's bringing them a safe investment that gives them fantastic returns with limited risk.”
- Sean Gilbert / Chief Investor Network Officer at the GIIN
“We need to start with understanding the nature of our capital and what it wants. If capital wants a high return, we need to evaluate investments through that lens. If we have capital that is willing to accept risk because we're trying to have an impact, we need to evaluate investments differently. Even if we get back only 70% of our money, it may still be worth it if we're trying to make an impact.”
- Michael Grossman / Managing Director, Social Finance
“You can also measure biodiversity through sounds. Just listen to the birds! Birdsongs can be recorded and after that, machine learning can help to define which species are coming at what time.”
— Raphaël De Ry / CEO, ALLCOT
“Our partners identify what would be impactful for their communities. They either identify the data that already exists, but often what they're doing is identifying a data point that does not exist. When that happens, we develop a data set for public equities that would have a significant impact for those communities if investors were to use that data as a leverage point for their engagement and investment. That's generally how we measure impact… We talk to people outside of finance, and when there is no data, we help develop it.”
— Rachel J. Robasciotti / Adasina Social Capital
“I'm a big fan of foresight tools because I think once you project far enough into the future, it's easier to agree that you want your grandchildren to have decent education, good health, and live in a peaceful society.”
— Marunn Indreboe / Norec
“The way we presented data was actually from an economic standpoint, we basically came in and said, This is not about equity. This is about smart economics, if you don't have 50% of your population in the workforce, you're losing X amount of dollars, depending on the country that you could be generating for your population. Also, other studies show, okay, if women are not working, then you have an impact on other countries, you have impact on the health of children, you have impact on Child school enrollment, and so on and so forth. So it trickles down. So you don't present it as women should be equal to men, because we think that's a Western value. And it's a great idea. We present it as, look, it's good for your economy if you have your women working.”
— Iva Hammel / World Bank Saudi Arabia
Insights
Matching investors based on their risk appetite
Many investors tend to be large conservative institutions who want de-risked investments, but can’t find enough of these projects to invest in. Meanwhile, many projects are not able to attract the risk capital they need, as they don’t meet the risk profile sought by conservative investors.
Using data to envision a common future
Apart from using data to look at “now” and “how it used to be”, using data to envision a common, generally better, future is a powerful alignment tool, particularly in situation where different needs need to be mitigated.
Design challenge
How might we reduce fear and build confidence to fill in the gap between logic and emotions when making impact investing decisions by
visualising future scenarios of impact?
meeting kindred spirits?
reducing the perceived risk thanks to the community of stakeholders involved?