The Impact of Impact Investing

Last week, I had the honor of moderating the Backstop Solutions Group Women & Gender Minorities In Technology (Wit) panel discussion for 2018 at the Loews Chicago. This year's topic was "The Impact of Impact Investing: How Diversity & Inclusion Have Bolstered Performance.

Investors are flocking to financial products that assess the ethics, social responsibility, corporate governance and environmental records of the companies they invest in. Consumers are also more informed and demanding better from the companies they purchase from and the funds they invest in.

A 2015 analysis by the University of Oxford and Arabesque Management found that 72% of S&P 500 companies are reporting on sustainability and companies with superior standards improve their access to capital. To put the numbers in perspective, from 1995 until now, ESG (environmental, social and governance) investing has grown from $639 million to $8.7 billion, tackling issues like climate change, sustainability, education, healthcare, affordable housing, government effectiveness, economic empowerment and beyond.

Backstop intentionally and wisely, selected a diverse group of leaders in Impact Investing who are working on the private equity, venture capital, bond and foundation side of investment. This presented a unique challenge for me as the moderator because moderating a panel of six can be difficult, but moderating this impressive panel of women, working impact from both profit and non profit as well as public and private perspectives could have been been a train wreck, but it was magical and had a profound impact on me.

The evening’s panel included Debra Schwartz, Managing Director, Impact Investing at MacArthur Foundation, Emily Lawrence, VP Senior Product ESG Specialist at Northern Trust, Gerri Kahnweiler, Founder and Partner at InvestHER, Nicole Chavas, CEO at Greenprint Partners, Purva Patel, SVP at Nuveen Asset Management (a bond specialist), and Tyra Jeffries, Founder and CEO at CreativeCap Advisors.

These were six women I had never met. These were six women I had researched extensively, respected deeply and enjoyed immensely as our conversation centered more on our humanity and the challenges we face in this world, together.

The MacArthur Foundation, a pioneer in impact investing, has dedicated more than $500M of it's assets to ESG and Debra Schwartz leads the way. She wishes that investments would be more agnostic, faster and easier because she knows how powerful local investment can be. The foundation invested $4.5 million in Preservation of Affordable Housing (POAH) in 2003 and today they have 8,500 apartments in more than 70 developments spanning 9 states and D.C. Affordable housing is a leading issue in America. The national average for a one bedroom apartment in the U.S. is $864 and the Routledge Handbook of Poverty in the United States estimates that 100 million Americans live at or near the national poverty level.

Greenprint Partners, led by Nicole Chavas is a green infrastructure delivery partner that helps cities achieve high-impact, community-driven stormwater solutions at scale. Their community-first commitment means that they co-design each project with residents to revitalize neighborhoods, increase public health and safety, and create new job opportunities.

The Well Farm at Voris Field project in Peoria, Illinois is an excellent example of partnered impact. In a city of 116,000 people situated on the banks of the Illinois river, Peoria has had a long history of sewer system overflows polluting the river. The community and Greenprint developed green stormwater infrastructure that offered the neighborhood access to healthy, local produce, new career training opportunities, a safe community gathering space and most importantly, Peoria is working with the EPA to eliminate these combined sewer overflows, and hopes to be the first city to do so with 100% green stormwater infrastructure.

InvestHER Ventures, partnered by Gerri Kahnweiler is an early stage investment firm that partners with and invests in women entrepreneurs. Presently only 2% of venture capital is invested in women and since 2009, only .0006% has been invested in companies led by Black women. A recent Fast Company article quoted Melinda Gates as saying, "There is no country on earth where women have achieved true equality." The article also cites a study, published in the Harvard Business Review which found that investors tend to describe young male entrepreneurs as "promising" and women as "inexperienced", but we also have seen the other data like The Peterson Institute for International Economics survey of 21,980 firms from 91 countries which found that having women at the C-Suite level significantly increases net margins. InvestHER is out to make an impact, investing in women founded companies like BallotReady, CNote and KnowledgeHound.

 As of June 30, 2017, Northern Trust - through its affiliates, has approximately $1 trillion in total assets under management, including $65.9 billion specifically related to its diverse set of ESG institutional investment strategies, Emily Lawrence, VP Senior Product ESG Specialist brings years of experience and humanity to the impact journey. In a New York Times article, sponsored by Northern Trust they highlight a "value meets values" mission. “Investors are asking increasingly sophisticated questions of the companies in their portfolios,” said Emily Lawrence.

Nuveen has five decades of responsible investing leadership beginning with corporate engagement on anti-apartheid issues in the 1970's. They started their first dedicated ESG portfolio in 1990 and have $21 billion invested in ESG-focused strategies. Purva Patel is a bonds expert tackling local and state needs and the impact it has on effective governance for the institutions themselves and the constituents they serve. Nuveen has written numerous papers on responsible investing and as far back as 1971, William Greenough, it's Chariman said that "A corporation can only continue to be a profitable investment for its stockholders if it discharges its obligations to society."

CreativeCap Advisors helps managers launch their funds and offers virtual CMO services for asset managers, but what I was most interested in was their Emerging Managers Incubator Program, the first of its kind. The program is interdisciplinary in its approach and focuses on four critical areas: marketing, investor relations, business development and business management. Tyra Jefferies, the CEO has a unique opportunity to impact managers as they start their careers and instill a commitment to ESG investment with an eye on diversity and inclusion and she is up to the challenge.

I am a person who thinks about impact on a daily basis, from the work I do, the companies I work with, the people I mentor, the vote I cast, the food I eat, the products I purchase, the investments I make and the legacy I want to leave to my children and grandchildren.

Impact is one of those words that is a noun and a verb, a statement and an action and to me it's a responsibility as a member of the human race to strive to make an impact every day.

These women are the embodiment of impact. They had an impact on me.