Category Archives: regenerative capitalism

What’s new? Impact-Linked Finance: better terms, better impact

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  • source: Impact Linked Finance Fund

In the past few weeks, I came across several exciting new trends and innovations in the area of impact investment and blended finance. These include; the emerging social impact markets, trading social outcomes, and Impact-Linked Finance.

Impact-Linked Finance is a form of funding that directly links financial rewards to the achievement of positive outcomes. It incorporates financial incentives for enterprises that achieve exceptional (agreed upon and verifiable) positive outcomes. That means that a social enterprise will enjoy better financing terms (ie lower interest rates or a grant alongside a loan) if they meet specific impact outcomes.

“These outcomes can come in many shapes and forms – for example increased incomes for the poor, more gender equality, reduced plastic waste, or improved learning outcomes for children. The more social or environmental value a company creates, the lower its cost of capital will be. This value-creation could have a powerful effect. The best companies in the world – in terms of positive impact – would suddenly be able to raise large amounts of low-cost capital to scale. And even more importantly, they could further optimize their impact. As a result, resources would flow to what matters most to society, and this has mutually reinforcing effects” (Bjoern Struewer, Roots of Impact)

To learn more ILF and Roots of Impact

Global impact investment market exceeds $1tn

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The global impact investment market exceeded $1tn according to the latest study of Global Impact Investment Network (GIIN). Amit Bouri, CEO of GIIN announced this figure and unveiled the latest report Sizing the Impact Investment Market 2022 at GIIN Investor Forum in Hague (Oct 12-13).

“In recent times, the climate crisis, the drive for transparency around impact performance reporting, and global sustainability reporting standards have brought renewed attention towards the importance of implementing impact investing strategies throughout the investment process. The Core Characteristics of Impact Investing require a clearly stated impact intention, as well as measurement and management of impact performance throughout the investment cycle, to ensure that investments achieve positive impact results relative to the previously defined impact intentions” (from this report).

Other significant impact investment topics on the rise: Gender lens investment, Climate justice finance, and financial inclusion for refugees.

A must-read for business leaders: “Net Positive: How Courageous Companies Thrive by Giving More Than They Take” by Paul Polman and Andrew Winston

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source: netpositive.world

A timely and seminal work by Paul Polman and Andrew Winston. Paul Polman is Co-Founder and Chair of Imagine, Chair of the B Team, and Saiid Business School, a leading proponent that business should be a force for good. The Financial Times described Paul as “a standout CEO of the past decade”. In his 10 years as CEO of Unilever, he proved that a long-term multistakeholder model (ending quarterly reports!) can bring superior financial performance.

I will copy here the first part of the excellent “Exclusive Excerpt” of this book that Paul shared in his newsletter on Linkedin

Exclusive Excerpt

What is Net Positive?

Our vision of net positive is a business that improves well-being for everyone it impacts and at all scales—every product, every operation, every region and country, and for every stakeholder, including employees, suppliers, communities, customers, and even future generations and the planet itself.

This is a North Star. No company can achieve all these aims at once, but it’s where we should be heading if we want a viable economy and planet. To exist as a relevant business today is to enrich the world. The ultimate question is this: Is the world better off because your business is in it?

What it looks like

The net positive company will operate differently from what’s normal today. It will, for example, eliminate more carbon than it produces; use only renewable energy and renewably sourced materials; It will, for example, eliminate more carbon than it produces; us create no waste and build everything for full circularity, and replenish and make cleaner all the water it draws. This excerpt can be read in its entirety by going to the Linkedin link above.

Looking beyond the pandemic: what we have learned and how do we go forward

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sunrise sardiniaI took a long break from this journal which I started in 2006. My last entry was in May 2020 (below) on some thoughts on the Great Reset. The COVID-19 pandemic went viral causing millions of deaths globally and affected everyone, how we live, work, think and interact with each other.

Fast forward, 18 months passed and now vaccines are available, though not equally accessible for all. Governments and companies have started to experiment to live with the pandemic as it is far from over. Tokyo Olympics has begun with no spectators.  It is perhaps a sensible time to reflect upon what has changed, what we learned, and how should we carry on forward.

One of the biggest changes to our lives (how we live, work, think, feel and interact) is that we have gone much more digital. Massive acceleration of digital adoption. e-commerce, remote working, e-learning, telemedicine. There are many positives and new opportunities but we have to find ways that the benefits of going digital also reach the last mile.

People, as well as organizations, have been forced to understand the importance of natural capital, our planet, climate crisis, diversity, and inequality.  What can we do as an individual or as a company or as a country? At least we are seeing a vast range of initiatives that are trying to crowdsource solutions for the climate, sustainability, diversity, inclusion, and inequality.

When thinking of where we are heading which should be a better world, it would be imperative to emphasize how we use, harness, and develop technology for all, in a human-centric way through a broad collaboration from all sectors and parties.

Recommended articles and initiatives:

https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-new-digital-edge-rethinking-strategy-for-the-postpandemic-era

https://malscontent.medium.com/why-thoughtful-technology-requires-everyones-attention-a-q-a-with-darlene-damm-part-1-8a0d018bf23c

https://climanow.ch/en/

https://climeworks.com/

https://brainforest.global/

 

Thoughts on The Great Reset: COVID-19

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IMG_6400In some ways quickly and in others in slow motion, the world has changed in front of our eyes and screens. We, everyone in the world, have been impacted by the same cause, almost at the same time. This turmoil caused by the Covid-19 pandemic underlines how we are interconnected and it is a wakeup call for us to realize what truly matters and what not. Needless to say, there is a big difference in the challenges posed depending on where you are and the degree of how privileged or not privileged you are. As to this reality of inequality what comes to mind is one of my profound beliefs;

“From those to whom much is given, much is expected”

So, what kind of mindset is needed and what can we do in this period of colossal transformation?

  • Stay fit physically, emotionally and spiritually
  • Be adaptable, positive, creative, courageous, empathetic and mindful of others
  • Connect, communicate and share your ideas and feelings to your loved ones, your colleagues and your community.
  • Offer help and encouragement to those in need

It is “The Great Reset”. I saw this expression first after the financial crisis of 2008 but I believe this time it is even more the case as it is impacting and transforming everyone’s lives in a massive way. How can we prepare for the future?

  • Stay positive.
  • Deal with what is needed today and tomorrow but think and plan for long term.
  • Master remote working, redefine how you work effectively and build trust with your team, suppliers, customers and investors using the necessary tools.
  • Discover or learn new skills that you were not aware you would be interested in. (webinars, Coursera, masterclasses)
  • Search for new opportunities that are surfacing.
  • Adapt, listen, learn, be empathetic.

We have a great opportunity (The Great Reset) to make our world better and more resilient by reinventing, redefining and improving on ourselves, our businesses and our planet.

Recommended reads: