MaRS Centre for Impact Investing is now seeking a Senior Associate, Capital Advisory Services! From persistent poverty to climate change, we face entrenched social and environmental problems. Fortunately, a growing number of charities, non-profits, co-ops and for-profit companies are building business models to tackle these problems. They are turning to investors for the financing to […]Read More ›
An Interview with Antony Bugg-Levine: Embracing Impact Investing (Part 1)
I recently had the privilege to speak with Antony Bugg-Levine, Managing Director of the Rockefeller Foundation, Board member of the Global Impact Investing Network and one of the thought leaders and influencers in impact investing. He leads the Foundation’s impact investing team that works to harness the capital and expertise of investors making “impact investments” that generate a social and financial return. This in an insider interview to his book, Impact Investing: Transforming How We Make Money While Making a Difference. This book was co-authored with Jed Emerson, an executive at ImpactAssets, Senior Advisor with the Sterling Group (Hong Kong) and a senior fellow with the Center for Social Investing at Heidelberg University. In our conversation, he shared key highlights in the book as well as his hopes for the book. Note: This interview is being posted in three parts; stay tuned for Part II and Part III over the next few days.
1) The premise of the book is on impact investing. How do you intend for people to read this book? What mindset should people be in?
Firstly, this book is not a ‘How-to’ guide for practitioners or investors who are looking for simple guidelines on how to construct an impact investing portfolio. There are other guidelines or resources that are available for that. We step back from the day-to-day work of constructing a portfolio of impact investments, but instead ask the more fundamental questions about how impact investing, as a new approach to addressing social problems and deploying capital, is disrupting our existing systems. The book is constructed in two parts.
Part 1, The Terrain of impact investing, takes a quick overview of impact investing’s historic and current role in the following sectors:
- Accelerating the growth of microfinance
- Supporting the international development agenda
- Helping to build the social enterprise sector
In each of these cases, we examine how impact investing is generating opportunities as well as a set of challenges and questions.
In Part 2: The Implications of impact investing, we examine the fundamental systems around which our society is organized and how, one after another, they are going to need to change to accommodate the aspirations of impact investing and to take advantage of the potential that this field offers.
This is really the core of the book: In our society, especially in the West in the past 50 years, we have organized our society around two fundamental pillars that support our current systems:
- The only way to solve a social problem is through philanthropy and the government
- The only purpose of investing is to make money
If you accept these two fundamental pillars, then the system we currently have makes sense, and will support your activity. However, if you believe in the fundamental premise of impact investing, that we can integrate our investment and our social purpose, then these systems do not work. So in the book we highlight how impact investing is challenging various systems to change: the legal system, the philanthropic system, the system by which we develop leaders, our capital markets and our systems for measuring value.
We provide a framework for thinking about the new systems we will need to build. We think what is really exciting about impact investors is the opportunity to build a new set of systems to realize the great potential of impact investing.
However, we are not overly prescriptive partly because we don’t claim to have all the answers. We do not know, between Jed and myself, exactly what these systems need to be, but there are clear guidelines on how as a community, we have to engage on this.
Antony Bugg-Levine is the co-author, with Jed Emerson, of Impact Investing: Transforming How We Make Money While Making a Difference (Wiley, 2011) which will be released in early September and is available now for download as an e-book. The opinions expressed in this article do not represent the official views of any institution with which he is affiliated.
Photo credit: Jai Catalano