Big Ideas: Jed Emerson on how investors can move from intent to impact
Here’s the second installment of our Big Ideas feature — in which we check in regularly with big thinkers in the field of social innovation. We want to know what they’re working on, what questions they’re wrestling with, and what opportunities and challenges they see up ahead for the social sector.
For two decades, Jed Emerson has been a leading thinker at the nexus of the social and business sectors, helping colleagues reimagine answers to fundamental questions like: How can we measure value? How do we calculate the “social returns” on investments? How can foundations, governments and businesses bring to bear the full arsenal of their resources to advance change? His concept of “Blended Value Investing” has provided an intellectual underpinning for practitioners of “sustainable investing,” “impact investing,” “strategic philanthropy” and those interested in building “nonprofit capital markets.”
Recently, Emerson took on the question of whether hedge funds can engage in sustainable investing (PDF). “Reviewers from the nonprofit sustainability space hated it,” he recalled. “They said I’d totally drunk the market Kool-Aid. But those from the market said: ‘Of course it’s a good thing to do hedge fund investing this way.’” Emerson is used to being at the center of conflict between people with different world views. “It’s the story of my life,” he says. Below are some highlights from our conversation.
On his current work with Expansion Capital Partners: “I’m working on three projects that are all examples of how investors, asset owners and capital managers are exploring how to move from intent to impact. The first is Expansion Capital Partners, a VC firm that does clean and green tech investing. They’re pushing the assumption that because they’re investing in clean tech, they’re also investing in sustainability. So they want to explore tools out there – IRIS, HIP Investor, and so forth – to advance an integrated approach to their investing.”
On his current work with the World Economic Forum: “[I'm] working with their Global Advisory Council on Philanthropy and Social Investing to see what it would take to create a Global Social Competitiveness Index. We’re looking at indexes in use around the world to find indicators to gain insight about the future social competitiveness of given countries.”
On his current work with the Center for Social Investment at the University of Heidelberg: “We’re looking at the next generation of Social Return on Investment frameworks that could be used by foundations and public sector investors to get a better handle on the social returns being created through their practices.”
On what intrigues him most about impact investing: “It’s not any one thing. It’s not microfinance, or clean tech, or sustainable hedge fund investing. It’s the principles and practices that inform a variety of investment approaches – and the number of asset owners who are moving beyond, ‘We’re going to take a percentage of our pie and do socially responsible investing,’ to the number who now say, ‘This should be informing all our investing practices.’”
On how everybody already knows this: “We know that for a foundation to deploy only 5% of its assets is to under-perform the potential of philanthropy. In the same way we know that to manage a company simply for shareholder value misses the opportunity to create sustained value for all stakeholders.”
On how social change takes a long time: “Quite frankly it’s a little frustrating, because these are the issues that we have been talking about for almost 20 years. On one hand I’m excited by the progress. On the other hand, I’m like, ‘Oh my God, I’ve spent 20 years getting to the starting point.”
On being “passionately present”: “One of the great things that’s happened over the last 15 years is an awareness of the innovation that’s taking place all over the world. As we appreciate that, it’s important that we stop and reflect on what’s happening in our own backyards. How can we advance that work and make sure it’s connected with innovations around the world? This is what I mean about being passionately present in advancing the work of the whole.”
On an idea that recently inspired him: “I heard Willy Foote say the other day that at Root Capital they’re trying to be “pathologically collaborative.” I really like that idea. It’s hard to do especially when funding is so competitive. But I really like Willy’s concept because ultimately it’s not about building the organization, it’s about creating change. And that’s what we really need to maintain our focus on.”
Photo: Bob Emerson