If you have been following the impact investment movement in Canada, it is impossible to not know Joel Solomon: He is the chair of Renewal Funds, the largest mission venture capital in Canada. Except being a leader in impact investing, he is also an advisor and founding member of organizations vital to Canadian impact community, including Tides Canada, Hollyhock, Social Venture Network, and more. Right before writing this review, I looked up Active Impact Investments for research purposes, and Joel appeared again on their website as an advisor.
As a sustainable finance enthusiast, I have been following Joel on social media. Over the winter break, I had a pleasure to read his book The Clean Money Revolution, and I even had a chance to listen to his presentation at UBC Reads Sustainability last week! Putting the excitement of meeting an idol aside, I have been reflected on some points mentioned in the book:
- Patient Capital vs Public Securities
Joel proposed that for money to deliver the greatest impact, we need more patient capital (e.g. private equity) to provide long-term stable support to businesses. Public securities, on the other hand, provide little value to the society. Companies do require liquidity to operate, but the current buy low sell high activities are too frequent as if rainfalls quickly drained into the ocean – animals and plants (businesses and their customers) can barely make use of the resource. While studying the various aspects of impact investing, this perspective is new to me to examine the current financial market. We often pay attention to maximizing monetary result instead of the real value that money creates for us; capitals that stay longer with enterprises would most likely suit the latter purpose.
- Mainstreaming Impact Investment / Responsible Investment
Joel mentioned that financial advisors have a crucial role to mobilize the crowd to join the Clean Money Revolution. However, as most people have experienced, financial advisors rarely mention SRI/impact investment options. Why aren’t they doing that? In my opinion, advisors might be concerned that their suggestion would receive negative responses (e.g. “I’m not a charity, so just maximize my returns”), or that they don’t have motivations/related knowledge to do so.
The solutions for this are simple: First, we as clients have to let wealth managers know that clients demand greener, more responsible financial products. We can conduct market surveys, show the growing needs of SRI/Impact Investment to financial advisors, and ask people in our network to do the same. Also, if our wealth managers are tempted to bring up sustainable investment option to their customers, mention the benefits to them. Mention the satisfactory market rate of return and mention that a steady ESG performance will make investment safer. Managers will want to help clients to diversify their risks after all, and a few ESG champions would do the trick. If financial institutions make clean investments as default options, the collective impact would be head-spinning. It is the wealth managers that can help set up that default mode for our current capital market.
- Challenge of Perfection
I found the point “challenge of perfection” in the book to be deeply intriguing. Back in Grade 10, I set my mind on becoming a professor in the humanities. However, whenever I encountered debates about social and environmental issues, people “battle with each other over ideological purity”, as Joel mentioned. I found business to have the focus on persuasion and flexibility for collaboration, and that was why I eventually chose to apply to business schools. I want to learn the hard analytical skills while at the same time acquire the soft skills to nudge people towards making better decisions. Compromises are inevitable in fostering major change, but it might be beneficial in the grand scheme of things. I want to thank the author for reminding me that as change takes many steps, imperfection is okay. As I advance in my business careers, I will take this advice when facing difficult decisions.
After the presentation, I had a chance to chat with Joel about some topics mentioned above. He is a warm leader – the encouragement made by a pioneer in the industry would have a long-lasting impact on students like me, who aspire to follow his path. Whenever I encounter difficulties in study, work, or life decisions, it would always be these conversations that help me to continue pursuing my ideal on promoting sustainable finance. Thank you, Joel, for your time and the thought leadership!