Increasing transparency in impact investment
Do you know how your pension is invested? What does your bank do with its balance sheet? All investment has an impact on society. Sometimes that impact is positive; creating jobs and providing people with services they need. Sometimes that impact is negative; for example, polluting the environment or exploiting the vulnerable. That means over $70 trillion in assets globally affect every area of life from quality of housing to who receives healthcare. At Nesta Impact Investments we look for opportunities to invest money in companies that intentionally seek to have a positive impact on society.
Whether impact is positive or negative, we should all be accountable for the social impact of our investments. The leaked Paradise Papers is a timely reminder of the importance of transparency and has demonstrated an increasing expectation that individuals and institutions should be open in their financial dealings.
We are committed to transparency, which is why Nesta Impact Investments has just published its first annual report. It is our attempt to increase the transparency of our fund and share lessons from the front line of investing for positive social impact and financial return. In our report, we publicly set out our ambitions to change the investment industry by demonstrating clearly that it is possible to invest both commercially and make lives better. We set out a benchmark for the impact our fund is currently achieving and commit to using this as a measure of our success in future years. We also explain how we go about selecting for and managing high-impact, high-growth companies and share our lessons from the last year.
It is our hope that this transparency will drive more conversation about how to do impact investment in a meaningful way. To kick this off, we held a roundtable with industry experts to to get feedback on our recently revised impact strategy and provoke discussion around some of the questions raised by the strategy. There was a great mix of people from small VC funds to large pension funds and advisors and consultants. The conversation covered some of the most challenging questions for understanding impact in impact investing including: Is there a holy grail of a single impact metric? Do aggregated numbers lead to poor decision making?
Over the next few weeks we will be publishing a series of blogs that will cover the topics raised at that roundtable, highlighting areas of consensus and debate as well as potential areas for collaboration. If you have any thoughts, responses or ideas please join the conversation!