Summary from SOCAP 2020: Impact Investing for Systems Change

Impact investing has been a rapidly growing trend. People and institutions are increasingly demanding that their investments generate more than just financial returns, and since 2012, investments that generate positive, measurable social and environmental impact have grown by 274%. This year, that number is on pace to grow even more.

Just last week, Barron’s reported that ESG investing, a specific subset of impact investing for publicly traded companies, grew by 40% last year as “investor interest surges”.

And this growth hasn’t been limited to just institutional funds. Even individual startup investors and venture capitalists are prioritizing impact investing, with search volume up 1,000% over the last 10 years.

At Social Capital Market’s annual conference this year, investors, foundations, corporations, and even the public sector convened (virtually) to explore how impact investing can create a more fair and equitable economy. While SOCAP certainly has a reputation for being the go-to place to learn and network for all things impact investing, the conference is about so much more. This year will lay the foundation for a new decade in impact investing and inclusive economic growth, and against that backdrop, attendees explored themes related to how capital can be used to drive systemic change.

As Co-founder and Board Chair of Beneficial State Bank Kat Taylor shared, “Capitalism is part of the problem. If we don’t change it, it’s going to kill us all. We need to take back financial instruments to be public purpose in nature and benefiting community outcomes.” Indeed, this conference looks at system change in the most powerful system there is: the global economy.

In our S-GRID Social Enterprise Accelerator program, we highlight how businesses spend over $13 Trillion USD every year in transactions with each other – a number greater than all the impact investing assets under management, all the money spent by governments on foreign aid, and all philanthropic contributions COMBINED.

On the first day of the SOCAP conference, a panel session with Marcel Fukayama (Executive Director at Sistema B International), Victoria Gathogo (Head of Partnerships and Africa Expansion at B Lab East Africa), Morgan Simon (Founding Partner at Candide Group), and Holly Gordon (Chief Impact Officer at Participant) explored the essential role of systems change in creating a more equitable and sustainable planet. In order to do that, we have to help grow the economy through businesses that prioritize the health of people, societies, and the environment. 

Indeed, corporations are allocating more and more of their business-to-business spending to social enterprises. Just last month, SAP announced its 5 & 5 by ‘25 initiative, designed to encourage organizations across industries to direct more of their addressable spend toward certified social-enterprise and diverse-business suppliers.

On the third day of SOCAP, in a session hosted by MovingWorlds, participants explored how even small-scale social enterprises can help make the economy more sustainable, just, and equitable by partnering with corporate sector value chains (more insights here from PepsiCo). 

Even the most astute impact investor knows that a business can’t grow on investment alone, it can only grow by doing business. Value and impact are not generated by impact investing, but rather, by investing in businesses that make the world better through their core operations. As Favianna Rodriguez shared at SOCAP, “We can’t have an economic system that values life so little”.

SOCAP 2020 showed us that impact investing is not attempting to patch a doomed system, but rather, it is using its assets to build a better future by creating a system that works for everybody. Using carbon as just one example, Ibrahim AlHusseini, Founder and Managing Partner of FullCycle shared, “Some businesses have to upend the entire way that they operate. Every business should do a full carbon life cycle of what they’re doing. Most people don’t realize they might be causing a lot of harm. Start understanding your carbon footprint and impact on the world.”

As impact investing grows, the investors leading it know that they must do more than just invest capital. They must help change the core of the system itself so that all entities operating within it are accountable for and repairing the damage of the profit maximization model we’ve operated under for so long.

Indeed, in an earlier post, we explained why the World Economic Forum is betting on social enterprises to help achieve the Sustainable Development Goals.

A more just, equitable, and sustainable new normal is possible, and being more intentional about how and what we invest our capital into will help us get there. #BuildBackBetter.

Looking for support growing your social enterprise? Learn more and apply to S-GRID, a new kind of social enterprise support program for a reimagined economy.