Venture capitalists and other private investors can influence the direction and practices of private companies, including for social impact. difficult to achieve than one might think.
To achieve a portfolio in which 100 percent of investments create social value would require an investor to forgo investing in any business that has other options.
There does not need to be a sacrifice between achieving top-tier financial returns and positive social and environmental impacts.
We agree with the authors’ that it is “special knowledge” that can allow an investor to deliver market rate returns and measurable social or environmental impact.
Just as investments sit on spectra of risk, return, and liquidity; so too do they sit on a spectrum of impact.
Social and environmentally aware investing—when done well—does not lead to concessionary returns and in fact it does quite the opposite.
In a world where the majority of market capitalization is driven by intangibles, managing ESG risk and reward is just good business.
People working within the best companies in the world are more often than not motivated by solving problems and making the world a better place.
Impact investors operate within complex ecosystems, which is why the more nuanced concept of impact management is gathering steam.
It is also possible for an impact investor to have considerable impact by supporting firms that pioneer the emergence of an entirely new sector.
Last Word: Paul Brest, Ronald Gilson, and Mark Wolfson respond to the 11 people who commented on their article.