“SOCAP conference teaches doing well by doing good”
By Carolyn Said October 9, 2015 (print date October 10, 2015)
After decades on the fringes, impact investing is going mainstream.
Though the phrase isn’t yet commonplace, the concept is familiar enough to have spawned several monikers: values-based investing, green investing, mission-driven investing, sustainable investing, socially responsible investing, principled investing.
Some 3,000 investors and entrepreneurs convened at Fort Mason this week to discuss the idea at SOCAP, the leading conference for people who want to support social innovation with their money — but not purely as an act of charity.
“Social-impact investors want to make sure they are doing good in the world but as a genuine investment, not philanthropy,” said Eryc Branham, CEO of MissionHub, which produces the conference as well as operating five Impact Hub co-working and event spaces, including ones in San Francisco and Berkeley. Social investors “want to put their money to work in companies they believe will make the world better.”
SOCAP — the name stems from “social capital markets” — calls it the intersection of money and meaning.
The conference, which ended Friday, featured sessions on topics such as financing healthy food, funding fair trade, slow money, localism and sustainable supply chains. While sessions such as “Does money have karma?” and “Can brands really be ‘good?’” seemed unique to the audience, many of the topics — climate change, gender balance, diversity, research metrics — would fit in at any mainstream investment conference. And the social enterprises’ reliance on hard data and rapid innovation is drawn straight from the Silicon Valley playbook.
The rapidly growing field measures returns not just in dollars and cents but in social and environmental change.
But quantifying those changes is challenging. JPMorgan and Global Impact Investing Network surveyed 146 impact investment firms and found their market size to be $60 billion, said Abhilash Mudalier, the investing network’s research manager.
His nonprofit is creating frameworks to assess social and environmental performance, looking at metrics such as the number of clients served, production yield for agriculture, student retention rates and job creation. “A standard library of metrics to assess scale and effectiveness of impact investing will help it grow,” he said.
On the financial side, some investors accept lower returns as a trade-off for doing good. But they don’t necessarily have to.
A new report from the Wharton School at the University of Pennsylvania found that pursuing a social agenda doesn’t come at a financial price. After studying 53 funds with 557 investments, Wharton found that their rate of return from 2000 to 2014 was in line with benchmarks like the Standard & Poor’s 500 index.
“It’s possible to have both financial and social returns,” said Lisa Hall, managing director of impact investing at Anthos Asset Management. “Only when we can demonstrate market-rate returns, will institutional investors bring large sums of capital to the table.”
Already major Wall Street players like BlackRock and Bain have created impact investment vehicles in response to investor demand, not because they suddenly had an attack of altruism, as the conference brochure dryly noted.
While impact investing amounts are still small compared with the multitrillion-dollar financial market, the potential for making a difference is immense.
“For the first time in the world’s history, we are within reach of the overarching goal to end extreme poverty by 2030,” said Ann Mei Chang, executive director of USAID’s Global Development Lab. “Social entrepreneurs are vital to achieving this goal. They drive economic growth by using market-based approaches.”
At a trade show in Herbst Pavilion, social entrepreneurs demonstrated products ranging from cricket-flour tortilla chips to crafts made by women who’d survived sex trafficking.
“We’re trying to show that menstruation is something to celebrate, not be ashamed of,” said Diana Sierra, co-founder and “chief empowerment officer” of BeGirl, whose colorful panties and sanitary pads aim to help combat a huge school drop-out rate among girls in East Africa who can’t afford sanitary products.
Social entrepreneurs used the event to connect with one another as well as with potential investors.
“We’re talking about electrifying Africa,” said Eve Meyer, chief operating officer of PowerGen. She was meeting with Pras Krishnan, president of Pro Batteries Technology, about using his batteries to store solar power so remote village could have lights at night.
Carolyn Said is a San Francisco Chronicle staff writer. E-mail: email@example.com Twitter: @csaid