Conversations from the 2016 Social Capital Markets Conference
In mid-September, I travelled to San Francisco to participate in the annual Social Capital Markets conference known as SoCap. In its ninth year, SoCap describes itself as the place “where the global community using business as a force for social change gathers to listen to each other, and to learn, and to get things done.” I last attended SoCap three years ago, and was pleased to see how much the event has grown and evolved in that span of time. There were over 2500 people in attendance, from 60 different countries. They represented impact investment funds, international community development organizations, regenerative agriculture projects, and social enterprises, all focused on addressing critical issues like global poverty alleviation, social justice, and climate change, and the conversations were inspiring. Important questions were asked, and moving calls to action were made.
As we’ve seen Impact Investing begin to move dramatically into the mainstream, I was heartened to hear SoCap bring to the fore the priority of ensuring that the social and environmental goals at the heart of Impact Investing don’t become overshadowed by the drive of the extractive economic model currently dominating our financial system. With a huge focus on inclusive strategies for investing, there was deep attention given to addressing racial and gender inequities within our capital system, and how to transition from an Extractive Economy to a Regenerative one.
Speakers like Morgan Simon of PI Investments, Andrea Armeni of Transform Finance, and Rodney Foxworth of Invested Impact cautioned us that accepting incremental positive change within a paradigm that is inherently unjust and extractive is just not good enough. We need to focus on systemic, long-term change with structural fairness. As investors seeking positive change, we need to make sure that we give more than we get and that our work is truly building up communities rather than just another extractive tool. It’s critical to ask the question “Who is really benefitting?”—in other words, who is getting the profits and, is it fair? And, we need to be aware of who is bearing the risk, which should be shared by both investors and investees in a fair and meaningful way. All too often, it is the poorest communities that are forced to bear the greatest risks of economic decisions that continue to amplify the effects of climate change and pollution as well as income disparity.
We also explored the question of “how do we create and share wealth?” Our current system excludes large portions of the population from being able to actually participate in creating wealth. Looking just at the venture capital sector, it’s disturbing to see the statistics that reveal that less than 1% of venture capital is directed to people of color and less than 5% is directed toward women. Huge swaths of our population are left out.
Today, there is more and more research affirming that diverse teams are in fact stronger teams that make better decisions together, and, in business terms, deliver both higher financial returns and reduced risk. For the first time, with long term research now available to back us up, the push for diverse representation in business can move from an obvious moral and ethical issue of fairness to include a very powerful business case as well. When we look at companies led by all white, male teams, we can now point to research that plainly shows that these are in fact likely to be riskier companies and that as investors we are no longer willing to take the risk of investing in companies that don’t know how to bridge the gap to inclusivity. Now is the time for conscientious implementation of inclusive practices driven by the deep knowledge that our businesses and communities will be stronger and more resilient with diverse players fully engaged in the process.
One of the many critical strategies well represented at SoCap was a focus on Regenerative Agriculture as a tool to reverse climate change. I find that the lessons and thinking within Regenerative Agriculture translate well across the whole spectrum of transformative finance. This approach considers ecosystems in a holistic way and strives to implement practices that support the regenerative capacity of the planet and communities, and further, redefines wealth itself to include those experiences, communities, forests, bodies of water, micro-organisms, animals, and systems that are regenerative. That is true wealth.