Positive Momentum in a Fractured System?
Last month KKR announced the launch of a new $1.3B VC fund to invest in for-profits tackling climate change and Jeff Bezos committed $10B to a philanthropic fund to reduce climate change. That's a lot of money going to the right place! Our first reaction was excitement that the momentum continues to build. Then selfishly we contemplate how these big funds might create future financing opportunities for the companies that we have invested in early. Then we are reminded of our insignificance and wonder if we can really make a difference with our fund which is dwarfed in comparison. We take a big breath and remind ourselves that we can and will grow larger over time. We are proud to be doing our part, and hope we are inspiring more people to engage in impact investing whether together with us or elsewhere. In the midst of all this reflection I finally finish reading "Winners Take All" (a must-read for those that truly care about impact) and get other important reminders. First, we will not be able to effect the level of change we seek simply through impact investing. It's an exciting category and creates a path for many more to participate because there is no sacrifice required. But for some issues, we can't rely on capitalism alone, we require government and philanthropy which is funny because we have been quoted saying that sentence in exactly the opposite order which is also true. For as much flack as our governments take for their inefficiencies, they play a key role in providing a platform for our companies to succeed. For example, we trust our currency to hold value and be worth earning and saving, we enjoy access to critical infrastructure and we depend on the maintenance of peace and order. We look for increased change to facilitate protection of planet and people alongside profit. The second key takeaway from the book for me was to hold people and companies accountable for how they make their money, not just how they give it away. Jeff Bezos and Amazon could be an example of this because the richest man in the world was minted by shipping items all across the world in an obscene amount of packaging. If he were to simply ignore these factors and then donate $10B to climate change then that wouldn't be enough. In his defense, we have seen a few announcements of late where Amazon is also changing their business practices to reduce impact such as electrification of their fleet and we hope to see more. To sum it all up, the best case scenario is that we coordinate all of the forces of change and stop trying to do this in a silo of just investing or philanthropy or government and that corporations become more accountable for their negative externalities in addition to investing and donating to create the changes they seek. For our part, we will continue to fund companies that create profits together with positive environmental or social impact, while doing what we can to to coordinate, support and leverage impact through philanthropy and government.