Creating A Stir in ESG, TBL, SRI and Impact Investing
Next year is the 25th anniversary of the thesis I co-authored with Susan Davis called Making A Profit While Making A Difference. Articles like this http://ow.ly/CtEv30dsmO4 combined with outreach and speeches helped promote what is now happening, however, articles like this http://ow.ly/t6It30dsmTh warned of possible problems.
While many are currently making huge fees (conferences, advising, fundraising) from Impact Investing here is my latest prediction.
In 5 years we will not be talking about Impact Investing as frankly, it is becoming co
mmon sense. In the very near future, what today is called impact will simply become the latest iteration of long-term value investing and the focus of alternative investment funds. In essence, Impact Investing will become common bloody sense investing.
Brilliant people around the world are very close to producing tangible metrics for measuring the real connectivity between everything and everyone, which will allow for much more accurate and transparent risk/return profiles of any investment in anything. The ability to measure risk vs reward through a whole systems lens will allow investors to fully understand and price in the social, environmental and economic externalities affecting every potential investment.
Understanding global connectivity from top-down to bottom-up, while transparently being able to measure the externalities driving the real risks, returns and trade-offs of investing in something or not investing in it will become commonplace. For example, we will be able to see instances where not investing in something will have bigger risk profiles and produce deeper losses (think through this) than actually investing it.
The above will transform the current paradigm of privatizing gains while democratizing risks and losses.
I am sure people brighter than I will come up with a new terminology (we have already had SRI, ESG, TBL and now Impact) but in the end, it will be just common sense.