Welcome to The Impact Economy

Something momentous occurred this past week.

No, it wasn't the failure of a dysfunctional U.S. government to keep its doors open (nothing too unusual there). Nor was it that NASA scientists announced that 2017 was the second hottest year on record (ditto).

No, what I am referring to, something that was truly astonishing, was that the largest investor in the world publicly acknowledged that we have entered The Impact Economy.

What is the Impact Economy? Hold your horses, I will get to that. First let's review a couple key phrases from this week's announcement by Larry Fink, CEO of $5.7 trillion investment firm BlackRock:

To sustain [a company's] performance... you must also understand the societal impact of your business as well as the ways that broad, structural trends – from slow wage growth to rising automation to climate change – affect your potential for growth.

...A company’s ability to manage environmental, social, and governance matters demonstrates the leadership and good governance that is so essential to sustainable growth, which is why we are increasingly integrating these issues into our investment process.

For those of us who have been proselytizing about impact for years, this announcement by the largest and most stodgy of global investors was, at the very least, a satisfying moment.

We Won!

By "We," of course, I don't just mean impact entrepreneurs and other aficionados of ESG (the "environmental, social and governance matters" Mr. Fink refers to). This "We" is much bigger.

The Earth. Its Peoples. Civilization.

But what is The Impact Economy? Hold your horses, a little more backstory first (readers of my articles know I love backstory).

Before Larry Fink, there was Robert Morris.

Bobby Morris was another BlackRock guy. Not a graybeard but a millennial. Low down on the totem pole, he sheepishly admitted to me in our first conversation a number of years ago.

Bobby was/is a member of the Impact Entrepreneur Network. He had reached out to me circa 2012 and told me he wanted to make change happen in his company (impact entrepreneurs, by definition, are in the "business of change"). He wanted to do some impact intra-preneurship. He was keen for some advice.

On our first call, Bobby told me that he had just read Jed Emerson's and Antony Bugg-Levine's recently released book on impact investing and that he was hot to get ii started at BlackRock. My initial response was a hearty chuckle and "Good luck!" If there ever was an old school, single bottom line dominated investment house, BlackRock would fit the bill. In fact, they probably drafted it.

Nevertheless, I encouraged him and over the course of a couple calls we strategized. Find some allies, I urged. Other millennial employees who shared his sense of mission. Build your case gradually, carefully. I could tell he was motivated and realistic, in addition to being idealistic. I could also tell he was strategic.

There is an oft-repeated line in the 2014 Oscar-winning film, The Imitation Game, about English mathematicians and crossword puzzle enthusiasts who broke the "unbreakable" Nazi-coding device called Enigma, and, in doing so, impacted the entire course of World War II, saving 14 million lives.

"Sometimes it is the people no one imagines anything of who do the things no one can imagine."

I last spoke to Bobby Morris just before he and his assembled team of impact decoders were to give their first presentation to senior management about the virtues of impact investing. I didn't hear anything for over a year.

Laughed out of the room, I feared. Or, even worse, ignored.

Then, one day, February 9, 2015 to be exact, on my news feed I read that BlackRock was starting an impact investing initiative. Bobby Morris was one of the first two employees assigned to the department (the other was brought in from Acumen) to work under the new director.

I emailed Bobby, "Guessing you got the ball rolling here?"

"Exciting, right??" he wrote back. "A legitimate investment from the firm allows us to really go all in here."

This past week, less than three years later, Larry Fink announced that impact has become central to everything BlackRock does.

"All in." Bobby was right. Did he know at the time just how right he was?

There is a crack in everything/That's how the light gets in (Leonard Cohen, Anthem)

Whatever the BlackRock announcement means in practice -- there will always be those vets in the impact space who are wary of proclamations coming from the Big Boys — call it a wariness of VW (Volkswagen) Disease, where ESG in retrospect appears more like a 12-step group for single bottom line addicts than a legitimate and honest business approach — one thing that is undeniable is the massive ripple effect the announcement has on corporations and other investors.

When the largest investor in the world publicly commits itself, not just a fund but its whole self, to impact we have clear proof that we have entered a new realm.

The Impact Economy.

So WHAT IS The Impact Economy? Well, The Impact Economy is a lot of things. Here is a short list of my thoughts on the matter:

• The Impact Economy is an economy populated by an abundance of triple bottom line ('impact") businesses that are fueled by impact investments.
• The Impact Economy has "global sustainability context," which means that micro-business decisions are regularly informed by macro-factors (such as those well-delineated by the U.N's Sustainable Development Goals (SDGs), which, interestingly, emerged the same year as BlackRock's 2015 impact investing thrust.
• The Impact Economy can be viewed and nurtured from several vantage points: local/regional impact economy, national impact economy, global impact economy. I call this three-dimensionality "triadic."
• The Impact Economy's authenticity comes from both intention and affirmation. Intention is its inward aspect; affirmation its outward. Intention is developed though the cultivation of knowledge and wisdom -- mindfulness and heartfulness. Affirmation is measured through... well, measurements.
• The Impact Economy's success hinges on its faithful adherence to the definition of "impact," which for the Impact Entrepreneur Network is defined as "the rigorous application of blended value."

And finally,

• The Impact Economy is the now economy. It is the future economy. It is a sustainable and just economy.

These days, I hear from Bobby Morris regularly through his emails. He has left BlackRock to be a poet and musician.

"Sometimes it is the people no one imagines anything of who do the things no one can imagine."

I like to think Bobby Morris is also an alchemist.

p.s. If you have thoughts on The Impact Economy, please do share them in the comments section below!

Laurie Lane-Zucker is founder and CEO of Impact Entrepreneur, a global Network of 16,800 "systems-minded" entrepreneurs, investors, scholars and students of social and environmental innovation. He also heads up the Impact Entrepreneur Center for Social and Environmental Innovation in the Berkshires.