New generations of investors and consumers are driving the change
We’re in the middle of a transition. While baby boomers are retreating both as business leaders and investors, money is changing hands. And so is power. Millennials are taking over, along with their desire to bring positive impact on society and the planet.
Organized by MBA students from IESE Business School in Barcelona, the Doing Good, Doing Well Conference is in its 17th edition, yet the debate about impact investing and businesses for good had never been so palpable. “All the stakeholders are involved. The pressure for change is coming from everywhere”, said Pedro Goizueta, Investor Relations and Operations Director at Global Social Impact. The real shift here is in the word “investor”. There’s a demand for transparency, reporting and real proof of impact so as to avoid greenwashing. Impact businesses are utilizing performance indicators to speak to investors.
The transformation started as an answer to the demands of a new generation of consumers. “If all of us stop buying plastic bottles, the industry will come up with an alternative solution in less than one month”, said Rocío Alcocer, founder and CEO of TAPP Water. A survey conducted by the ING financial institution is a good indicator of consumer power: 38% would actively stop buying products if they are not environmentally responsible. The rate is even higher among millennials: 48%. The action followed a profound distrust of traditional capitalism: 73% of people express a desire for change, and 56% feel that capitalism does the world more harm than good.
Hence businesses have started to rethink their purposes. “Capital is being reassigned. Large oil companies are investing in renewable energy while car manufacturers are launching electric vehicles. Part of the assets are being shifted to sustainable investments with a long term view”, says Fernando de Roda, co-founder at Greenward Partners. The example is also coming from banks and investment funds – players like BlackRock – the global investment manager which launched a myriad of high risk sustainable funds -, and pension funds, such as the Spanish VidaCaixa and Citi, are publicly defending impact investing as a smart long-term investment option.
Technology has been a good ally when it comes to innovation and impact measurement. “It will democratize investments and lead to impact investing for everyone”, said Enrique Albarado, Head of Technology of Bamboo Capital. “It brings transparency”, claimed Fernando de Roda. Surely, It will help sustainable businesses – one of the biggest challenges to impact investing, according to the panellists – move faster. “Short-term return goals are a major problem”, insisted Financial Times reporter and producer of the digital platform Moral Money Billy Nauman. In his opinion, society should swiftly solve the more important problem: the environmental one. “There’s potential, but we’re not making progress to be anywhere near the 1,5-degree commitment. We’re moving, but not fast enough and we need to get big assets involved”, he said. It’s a matter of sustainability at its roots: to ensure that we still have businesses in the future.
Horyou is a media partner of Doing Good, Doing Well