In their interview, the Hewlett Foundation’s Larry Kramer and Ana Marshall raise critical issues for all impact investors. The lack of ‘performance presentation standards’ to accurately capture and make comparable the financial and social returns from impact investments is a key issue and one which must be addressed across asset classes. If these were in place, their other critiques – like greenwashing and high fees – would be reduced or eliminated. Marshall acknowledges that it took 20 years for the mainstream investment community to create these standards. Impact investors must get there more quickly.
While Kramer is right that we need to rethink capitalism, most impact investors accept the flawed tenets of capitalist production and seek to demonstrate how the tools of a capitalist system can be used to build better, scalable, resilient solutions to the critical social and environmental problems we face.
Kramer and Marshall’s approach – making money from investments in fossil fuel companies while simultaneously funding grantees to put them out of business – misses the point that there are promising approaches to making a transition away from fossil fuels. In partnership with non-profits, impact investors have led the way towards creating investment vehicles that facilitate financing of alternative energy companies to replace fossil fuels.
Our approach to impact investing is to leverage the full continuum of philanthropic investment options – including grants, programme and mission related investments – to maximise the social benefits a foundation can produce. We can work together to build the field – and even go so far as changing the system.
Vice president and impact investing lead,
Rockefeller Philanthropy Advisors