Last week, I had the privilege of attending the regional Research Money Conference on Future Finance and Social Innovation. The topic at hand was ‘The Great Shift’ - a shift towards a number of up-and-coming movements including impact investing, crowdfunding, and social financing. As Amber Nystrom, Co-founder of Trinity Nexus, explained it, this Great Shift can also be seen as a ‘Triple Revolution’ - an empowerment and engagement of women and millennials, coupled with a $60 trillion wealth transfer over the next 40 years to ignite a new ‘Golden Age of Impact.’ This is an undeniably significant statistic, and I hope you are as excited about it as I am.
I had three major takeaways from the conference that directly apply to CoPower and the future we are working towards:
1. The impact investing conversation
What does impact investing mean to you? What role does it play does it play in the lives of the average investor? How can we use it to catalyze change?
With regards to the “impact investing conversation,” Jonathan Glencross of Purpose Capital opened with some profound remarks. In essence, he posed a simple question to challenge what has become more or less the status quo in Western capitalism: why solve problems at the end of life with the wealth you’ve accumulated (via philanthropic activities) when you can integrate profit and purpose to solve problems from the get-go? By integrating financial returns with social and environmental value and risk, a firm can truly deliver value to all of its stakeholders.
Where the conversation perhaps becomes complicated is when we speak about a more robust public adoption of the concept that Mr. Glencross espouses. There seems to have been two approaches to this debate at the conference - preaching impact investing ideals outwards to the traditional investing community in order to “convert” them, and emphasizing value investing without strictly isolating impact investing as the only route. Holly Ruxin, CEO of Montcalm TCR, prefered the latter approach, which she believes to be more effective in building a new and more sustainable socio-economic model. Rather than continually differentiating the impact investing community and having an “us vs. them” mindset, which could further diverge responsible investing from the average investor, she seeks to alter the infrastructure of the system by going back to the fundamentals; making value, integrity, and engagement the highest priorities while investing.
2. Collaboration between change-makers
Why the concept of competing over market share should not apply in a conventional sense to the impact investing space.
On the topic of collaboration, an unsurprising consensus was seemingly reached between panelists. During the crowdfunding panel later in the morning, the importance of fintech innovation for improving access to capital was emphasized. By working together on that common goal, fintech companies can disrupt the Bay Street status quo and further democratize the investing/borrowing horizon. David Shore from OurCrowd thinks big banks are terrified of this revolution, since they could lose many millennial clients, who may well vote "vote with their feet" and move their assets elsewhere if they aren't provided interesting investing opportunities.
These concepts certainly apply to CoPower, and our goal to democratize clean energy investing. Tim Nash, the Sustainable Economist, highlighted the collaboration between CoPower and ZooShare as a prime example of two companies in the same space working to ‘grow the pie’ as opposed to compete for marketshare. Our amazing director of Investments, Trish Nixon, reiterated this point in the session on building a global social finance marketplace. Mike Allen from Wealthsimple, an online portfolio management platform, also participated in the panel, and stressed the challenges of communicating the risk of an SRI portfolio to investors. While returns may be lower in the short run due to heightened volatility, empirical studies have shown that long term financial returns and social/environmental returns need not be concessionary. CoPower shares this challenge of communicating the risk of our green bonds to investors, and we are looking forward to working with Wealthsimple in the future to tackle this, as well as integration of an SRI debt product one day (we hope!).
3. Creating financial products that work for investors
By democratizing impact investing and buying into the Shift, we can use the capital markets as it was originally intended - to create value and improve our quality of life.
Finally, the creation of new financial products will propel the Great Shift forward. Holly Ruxin made another important point in her plenary, namely that sustainable investment products will allow people to re-establish trust in the system and those who run the economy at large. Similarly, by embracing technological change we can make improving people's lives a central goal of investing, along with advancing positive social change. Whether it be lowering the barriers to entry for investors, providing streamlined access to capital, or creating versatile SRI products, CoPower believes this is the future.
Tags: Impact investing - Green bonds - Green investing