Written by Chris Bowman
You can’t have your cake and eat it, we’re told with a stern voice and a wagging finger. It’s impossible, like a cat that’s both alive and dead.
But wait! Everyone’s favourite feline-physics thought experiment suggests we can have a kitty straddling the mortal divide1. So maybe we can have Schrödinger’s cake too, both had and eaten…
But what does all this nonsense have to do with impact investing?
Well, that idea – that you can’t have your cake and eat it – is one of the toughest comms challenges for the impact investing industry. The idea that you can achieve an attractive rate of return and do good for the world just seems too crazy to too many people. A recent Morgan Stanley survey found more than half of the 1000 people surveyed, “believed there was a financial trade-off when it came to investing sustainably, a trend researchers said needed ‘myth-busting’” (reported by Campden FB).
You can sacrifice the cash to do some good, or make some money with cold, hard capitalism. Maybe you can make your millions and then do some good through philanthropy – but both at the same time? Pfft.
But you can have your cake and eat it! The most recent annual survey from the Global Impact Investment Network (GIIN)2 tells us that two thirds of respondents targeted risk-adjusted market rates of return and 91 per cent reported financial performance that met or exceeded expectations.
So why do we persist in this puritanical conviction that good works can’t be profitable? And how can we convince the investor community that you can have your cake and eat it too?
I blame Bojo. He said we could have our cake and eat it when it comes to Brexit, and my default policy is to mistrust any piffle from de Pfeffel3. But, looking through a wider aperture, we’d be right to be cynical. Internet scams (learn how single mum in your area makes £2000 per day from home!!!) are a good demonstration of the maxim that, if it sounds too good to be true, it usually is.
It’s also fair to say that morality and profitability have not always been BFFs: from the Victorian workhouse to the historically bonanza returns of sin stocks and fossil fuel investments, we’ve learnt to see profit and impact as an either/or choice.
What to do?
There are two (relatively) straightforward things to do from a comms perspective, and a trickier third.
First: evidence, evidence, evidence. Overwhelming expert consensus doesn’t convince everyone (*cough* climate change), but it’s certainly a necessary condition for behavioural and attitudinal change. Luckily, the ever growing body of research from organisations like the GIIN and the Omidyar Network is steadily ticking this box.
Secondly, there needs to be clarity and consistency across the industry about what is – and isn’t – impact investing. There’s still too much confusion with ESG and SRI on the one hand, and philanthropy on the other. There are certainly links, but they are not the same. The industry also needs to be louder and bolder in condemning attempts at ‘greenwashing’, where companies falsely co-opt the ‘impact’ label for promotional purposes, diluting its effect.
Finally, we need to offer easy counter mental frameworks to the having/eating cake paradox. We latch on to easy aphorisms because they’re neat and offer a ready-made heuristic to evaluate the world. That’s easy and comforting. Interrogating each and every proposition on its own merits, by contrast, is tiring and demanding.
So can we offer some retaliatory pith? Some counterclaims that are as easy to latch onto as the lazy dismissals? Maybe something around financial karma, or how you can’t create value without values? Perhaps we can go back somehow to the basic idea that investing is about making a return by moving capital from where it’s accumulated to where it’s needed?
An all-singing solution is beyond the scope of a simple blog but, at Aspectus, it’s a challenge we’re helping ever more clients grapple with. Strategic comms, incorporating all forms of content, media and digital channels, are key to chipping away at infuriating misconceptions.
So, when it comes to impact investing, tell the world: Schrödinger’s cake doesn’t just exist; it’s bloody delicious.
1 I know it doesn’t really
2 Full disclosure: an Aspectus client
3 All political views expressed in this blog (well-concealed as they are) are attributable to the author alone, not Aspectus