Investor, Activist Seeks To Transform Finance For Good

Read the full Forbes article and watch the interview here: 

Hello everyone and welcome to the our mark on the world show i’m your host devin thorpe i’m a forbes contributor covering social entrepreneurship and impact investing in today we have a remarkable guest morgan simon who is the co-founder and chair of transform finance and she is an an impact investor who’s got a special passion for actually seeing impact investing

Realize its true potential to affect good in the world so morgan thank you very much for joining us today thank you devin i really appreciate the opportunity to be here well we’re glad you could take the time and listen tell us what transform finance is transform finance is effectively building a bridge between social justice and impact investment and just to

Take a moment on those two concepts social justice is essentially saying rather than just small changes we need some fundamental shifts to our economic and political systems if we want a world that provides equal opportunity and outcomes for all people and a planet that can support the future then impact investment i think has similarly revolutionary potential of

Saying let’s really be thoughtful about the outcomes that business can have on the environment and the planet so rather than simply investing without any regard for the social impact and then trying to solve social problems through the much smaller pool of capital that is destined for philanthropy really integrating the way that money works in society so that we

Can always be value aligned in the work that we do now impact investment might wind up making very small positive changes to the economic system or it could really create a new paradigm and that’s where the principles of social justice inserted into impact investment can really ensure that we realize our potential as an industry and as the world so what are some

Examples of the weaknesses or flaws or deficits or deficiencies you’re seeing in the impact investment practice today well i would say we really it chanced from finance organized around three main principles where we’d love to see things move so the first is making sure to engage communities and design governance and ownership of enterprises of not just seeing

People as consumers or justice producers but that they really should be protagonists of their future as well and that if we’re not more thoughtful about how assets are distributed in society it’s hard to imagine a world without poverty the second is being really thoughtful about adding more value than we extract as investors that there’s many ways that you can make

A community a little bit better off but still fundamentally the extracting financial value so we really try to work hard to ensure that we want to leave a community better off than we found it if we’re going to call ourselves a master the fun principle is balancing risk and return between investors entrepreneurs and communities so really being thoughtful about

The value that all these parties bring to the table and that they all deserve to be rewarded i’m sure because you’ve got i think your website says or you told me five hundred and fifty million dollars kind of on program with you give us an example of an impact investment a project or a company that’s been funded that that really typifies what you’re talking about

So devin you’re referring to the transform finance investor network which was launched at the white house last year and this was investors coming together with significant assets saying we really want to be thoughtful about how we can deepen our impact and stay accountable to the communities that we intend to serve and one of the businesses that we feel is doing

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Exactly that is a group called the working world that actually piloted the idea of non extractive finance and this is essentially working with work around cooperatives in argentina nicaragua and the us based in new york and one ensuring that not only are we doing job creation but being able to make workers into owners and then doing so through a financing mechanism

That prioritizes the workers so really putting investors and workers on a much more even footing you know i can’t help but want to talk to you about something that is closely related i guess i’ve long admired volkswagon as an innovative company that really put environmental friendliness at the forefront they’ve been developing a little car that’s a plug-in diesel

Hybrid that would get something like 270 miles to the gallon you know it’s it’s kind of sexy in a in a way and so i’ve really been disappointed by recent news around volkswagen and it seems to me to point out something that i find to be really disappointing it suggests that there is an inherent flaw in capitalism that that the search for profit seems to force this

Questionable behavior do you see transfer finance as a solution to that problem as well or am i barking up the wrong tree so there’s there’s a proverb that says if you don’t change directions you will get where you are going and i think the way that capital markets are organized are essentially to exploit people in the planet to the pursuit of profit without really

Looking at what is the type of world that we want to create and transform finance is just one organization as part of a broader movement of people that’s really trying to look at what’s the world that we want to create and therefore what’s the type of economic system that’s going to best support that so i think you would see if you have investors who are being much

More thoughtful about long term impact and that are doing a much better job of deep with so many in a receivable return we lost a little bit of what you said they’re afraid morgan i apologize i’m gonna turn your camera off to make sure that we use your bandwidth to hear your brilliant insights but why don’t you repeat if you can the last part of your thought there

Because i think we want to hear what you have to say sure thank you kevin so essentially i’d started by noting a proverb that if you don’t change directions you’re gonna get where you’re going which is essentially a financial system that is not serving the needs of people in the planet and that transform finance is just part of a broader movement dare i say a

Groundswell of people who are saying we want a financial system that really serves our purposes and that doesn’t drive companies to make when i would fundamentally saying are not just bad decisions for the planet but are bad business decisions that are not going to support the long term growth of companies for shareholders and stakeholders you make a great point

The capitalist argument is that what happened to volkswagen or what volkswagen did didn’t happen to them they did it what both ryan did shouldn’t happen in a capitalist society because we should price in the risk of being discovered clearly if they did price in that risk they felt the probability of detection was low enough that they could afford the risk and so

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Capitalism gets us this result so how do we get the other result what what’s the shift what’s the direction change we make with capitalism to get the social justice outcomes you’re looking for sure and feel free if you’d like to try the camera and see how we do but i think there’s essentially two things one is that we need to stop fighting poverty with one hand

Tied behind our back which is the idea in general of impact investment that if i make my money in the economy that is pillaging and exploiting people and doing all sorts of terrible things and then just take a tiny percentage of that to try to fund the solution i’m essentially rolling a rock up the hill but i’m never going to win so i think the first piece is to

Fundamentally reach think how we’re deploying capital in society and to change that road now the next piece is that social change is hard work and it’s very hard even if you put the brightest minds in a room together to essentially figure out what are the most powerful effective approaches possible there’s no way we can do it on our own and there’s no way we can

Do it without accountability direct accountability to effective communities so how do we really brought in that conversation ensure that many people can be part of determining what impact investment is able to do otherwise if we simply lead the definition is up to the banks we’re not going to change our path yeah clearly we need to do something systemic right –

To capture the externalities in costs so that a corporation an investor whatever capitalist you might have in front of you is taking into account the needs of the community narrowly that he serves and more broadly the world right because if you don’t take into account all of those issues you get what we’ve been getting am i am i on the right track do you think

Absolutely absolutely and that’s where i think would transform finance we have the opportunity you know in general we work with three main constituents so supporting investors that want to be more social justice oriented supporting the growing class of social entrepreneurs who may go through incubator programs or they learn about finance and marketing but don’t

Have direct access to resources on how do we think about the communities we engage with and what are what sort of ownership models we might want to explore and then finally supporting social justice leaders and nonprofits that are interested in this growing conversation but don’t necessarily know the finance world to feel comfortable jumping in but one of the

Major trends that we’re seeing over the next decade impact investment is projected to be over ten times as much as official development aid so that’s a fundamental shifting of how social change is funded globally and that means that a much broader community of people need to be aware and need to be able to be protagonists in that conversation so we see activating

Those three communities is the most concrete way to be able to address these issues systemically and we would invite anyone who’s interested in that conversation to join us to reach out on transform finance our work well morgan you have been tremendously successful really in becoming a key player a real leader a role model in the impact investment community who do

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You look up to who inspires you i have to say on a daily basis i’m so inspired by my co-founder and executive director andre are many who has really given every ounce of his intellectual capacity to building this community to making this project work and i think in general being able to work closely with people who inspire you is such an incredible gift and i’m an

Investment professional i’m currently executing an impact investment strategy on behalf of a single family and that means that i contribute as much as i can to transform finance as for chair and know that i’m just one of many individuals and the community andreea has built to make this project successful tell us why you do impact investing with your skill set you

Could be doing anything why this i think for every person particularly that’s interested in social change it’s figuring out based on our particular cultural context gifts citizenship wherever we might be in life of where do we get to have the most power and i actually started off as a student activist it’s worth more college looking at the school’s billion dollar

Endowment and saying this is a leverage point that i uniquely have at this moment in time and let me use it and i think that often people even if they don’t have personal wealth don’t recognize the fact that they are connected to so many wealthy institutions so it might be a teacher who’s part of the pension fund or any university student and being able to leverage

That power for good so i think that in general is my approach to look at what are my access points and how do i really maximize that for social change that’s great you’re really a great example to us and i appreciate that now before you go i want to ask one powerful question of you and that is everyone who’s watching wants to have more impact do more good tell us

What you think is an impact hack something you do every day or regularly habitually that we could do and that would increase our impact sure i i think a lot about rather than growing organizations of growing movements and reminding myself that that’s my objective and i think often the way that social entrepreneurship is positioned is the lone ranger on his horse or

Her horse who’s supposed to really solve all these pressing issues on their own and that’s just a setup for frustration and failure so i rather than even thinking about the success of transform finance it’s thinking about what is the whole movement coalescing of organizations and individuals and that might even include some unlikely bedfellows in that combination but

If i’m able to convene enough energy around these topics i can really make something happen and then it also means that i can sort of rest at night knowing that it’s not all in my shoulders that were able to do this together fantastic well andrea andrea i’m thinking of your partner morgan how do people connect with you to learn more about transform finance sure so

That’s would be to connect through our website transform finance to other word they can certainly email the executive director andreea transform finance org or connect with me on twitter at hashtag morgan simon one fantastic morgan again thank you very much for being with us today we wish you every success and the great work you’re doing thank you governor all righty let’s do some good

Transcribed from video
Investor, Activist Seeks To 'Transform Finance' For Good By Devin ThorpeliveBroadcastDetails{isLiveNowfalsestartTimestamp2015-10-01T190105+0000endTimestamp2015-10-01T191613+0000}