Recently, I had the opportunity to moderate the Social Finance panel at The Wharton School’s Social Impact Conference. The theme of the conference was "A Look Inside the Enterprise of Social Change," and the breadth of sessions certainly offered insights into how to participate in advancing the impact investing industry. It was great to return to my graduate alma mater, and to learn so much from the experts and pioneers of social impact. I can see how our current efforts to transform investor culture align with the opportunities and challenges discussed at the conference.
The opening keynote featured William Lauder, Chairman of Estée Lauder Companies, who spoke on the "Beauty of Responsibility." He highlighted the company's efforts to go beyond making consumers look good, to also engaging them in "contributing to good." Estée Lauder strives to instill in its employees a corporate value system that goes beyond simply selling and incorporates the ethical decisions and cultural sensitivities involved in sourcing ingredients and distributing products around the globe. In Lauder's view, it comes down to motivating employees with service opportunities and maintaining integrity of the brand.
Another panel featured social entrepreneurs who are current Wharton undergraduate and graduate students and recent alumni. From online platforms (@ElectNext, @PoverUP, @Pledge4good) to product & service businesses (@TheWashCyclist, @HydrosBottle), they provided great insight into structuring and developing enterprises that offer value and make an impact. I was impressed by their creative and simple solutions. For example, Wash Cycle Laundry seeks to incorporate environmentally sound practices at every stage by using water- and energy-efficient methods and delivering laundry to hotels, hospitals, and restaurants in downtown Philadelphia via bicycles all while providing job opportunities to welfare-to-work participants.
My Social Finance panel featured for-profit and non-profit investors. Amy Dalal of @Acumenfund spoke both of the wide spectrum of investment opportunities and of the hurdles faced when trying to prove a socially motivated business concept and grow it to scale. The main industry challenge, said Tom Balderston of SustainVC, is the greater need for more capital and critical mass to grow impact capital. John Buley of @CASEatDuke highlighted the lack of intermediation to bring that capital to mission-driven companies and the dearth of financially trained leaders. Mona Sinha of @Asiaiix noted that while a lot of these small companies and entrepreneurs are quite sophisticated, investors tend to assume otherwise and may miss out on quality investment opportunities. I commented on the importance of investor partnerships as we seek to address the challenge of increasing, aggregating, and channeling capital to the marketplace. We were fortunate to enjoy a flurry of questions at the end from students such as whether they should pursue larger financial institutions or smaller impact-focused organizations after graduation. John answered it best: "Integrate your skills and beliefs no matter what career you are in."
In her keynote, Tracy Palandjian of @SocialFinanceUS presented an overview of the Social Impact Bond concept that her sister organization in the United Kingdom pioneered and which she is making progress implementing in the United States, first in the state of Massachusetts. Calvert Foundation is also at the table with other investors to assist Social Finance in solutions to monetize prevention (such as homelessness and recidivism), shift siloed thinking in government agencies, transfer financial risk appropriately, align incentives, and drive out inefficiencies.
I'm thankful that I was able to participate throughout the day, meet students and industry peers, and take away so many valuable lessons: (1) the time is now for both institutional and high-net worth investors to collaborate on solutions to bring patient capital to innovative businesses and (2) socially-focused enterprises must continue to compete effectively, manage risks and strengthen their business models to attract and retain that capital.