Is impact investing an Orwellian attempt to bring a globalist social justice agenda to the markets? The latest episode of the podcast, Pocket Dilemmas, which is put together by European Bank for Reconstruction and Development (EBRD), was entitled, “What does the coronavirus pandemic mean for impact investing?”
Listening to the podcast, this reporter couldn’t shake that thought, “Is impact investing an Orwellian attempt to bring a globalist social justice agenda to markets?”
Impact investing is, “made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return,” according to the 2017 Annual Impact Investor Survey put together by the Global Impact Investing Network (GIIN).
The podcast ostensibly was a discussion about the opportunities presented by coronavirus to make impact investing a greater part of market activity.
“Can we make social investing the new norm,” Alexia Latortue asked rhetorically on the podcast.
LaTortue is EBRD’s Managing Director for Corporate Strategy and was a participant on the podcast.
LaTortue explained further, “It is fairly clear to me of the trend that was already existing of impact investing and the market for impact investing growing- we can debate the numbers but I think the trend of growth is there- will I think be accentuated by COVID.”
Specifically related to COVID, she noted, “We know that there are huge financial packages being approved, particularly in the richer countries, for the COVID response, and so is there a way from the public policy perspective that we can link these massive inflows of finance into some countries to being spent in a way that reinforces certain outcomes particularly in the green space.”
How does a company get deemed to have a social impact?
“We have an exposure of what we consider good companies- companies that are acting in ways we would hope they would act during the crises- and perhaps less good companies?” LaTortue noted.
Who are we who decide which companies are good? That was not entirely clear, though they fall into one of three categories, called ESGs: environmental, social, and governance.
Kerrie Law was also on the podcast.
Law is an associate in corporate strategy, and she is the co-host of the podcast.
She suggested that a global institution would be integral in determining if a company is acting responsibly.
“There are these principles called the UN Principles for Responsible Investing, or the UNPRI, and these principles really work to understand the investment implication of environmental, social and governance factors.” Law said, “So, just last week, the UNPRI issued a new set of actions for investors to take regarding COVID response.
“So, for example, action number one says, ‘engage companies that are failing in their crisis management.’ There’s an action, which is action number three, which says, ‘investors should really look at reprioritizing the engagement on other topics.’”
Environmental issues are centered around climate change, a concept that President Trump is notably skeptical of.
In fact, the podcast noted that some American big tech companies criticized Trump’s removing the US from the Paris Climate Accord.
But Trump removed the US from the Paris Climate Accord for the same reason he would be skeptical of a global framework to define impact investing, his opposition to globalization as opposed to a US first policy.
Impact investment has also been embraced by some of the most influential Americans in finance.
In 2018, Lawrence Fink, the Chief Executive Officer (CEO) of Blackrock, stated this in a letter to shareholders, “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.” Fink said.
The podcast also said global powerbrokers have embraced climate change as being a part of their strategy.
“We have seen over the past few years- climate, climate change risk- absolutely become mainstream on the agenda of many central banks, and many finance ministers, and not seen as something other or cute, or apart, but actually part of their core job.” LaTortue said in the podcast.
By this she meant, that companies working on environmental should get a healthy amount of the money globally which is being spent on stimulus to keep economies afloat in response to COVID.
In the US, this is what conservatives will often refer to as, “never letting a good crisis go to waste.”
It’s a quote originally attributed to Rahm Emanuel, the former Democratic Congressman, presidential advisor and Mayor of Chicago.
It’s an idea abhorred by Trump and his supporters.
Jonathon Charles is a co-host of the podcast and he referred multiple times to the idea of a “Social License to Operate.”
“I’ve seen more and more companies talking about their social license to operate. By that, what I think they mean is that it’s not good enough just to be there as a company to make money, but in order to get public backing, which is important for any company to make money, you’ve also got to be seen as being interested in social issues.” Charles said on the podcast. “You know, we’ve seen companies for many years taking a morel lead on issues like the environment and LGBT issues.”
It’s interesting that companies taking the lead on social issues include the environment and LGBT issues, two issues associated in general with the liberal side of the political aisle in the US and not safe gun ownership or reducing the numbers of abortions which are associated more with the right.
LaTortue stated her approval for a global standard for measuring success in having an impact.
“We need to accelerate work on a common framework, a common standard, for actually being able to in a clear, concise and important way for impact achieved.” LaTortue said.
It sounds good but a cynic might say, ‘this is a way for globalists in a position of power to create a system which reflects their bias.’