Remember Charly Kleissner’s review of exciting things happening on the social enterprise scene in 2012? The conversation continued on trends to follow in 2013.
HUB Blog: You were saying that one of the highlights of 2012 was the amplification of questions about measurement. How long do you estimate it’s going to take until a viable answer becomes available?
Charly Kleissner: On the impact metrics side, within the next 3 years we will be moving from the ‘visionary’ stage to the ‘early adopter’ stage. Visionaries like us and others, are defining what impact means by doing impact deals; we are putting methodologies in place, we have to throw away some things that don’t work, we experiment and then report, we’re committed to open source, to radical transparency. We’re not afraid of being criticized; many in the financial community point fingers not even acknowledging that it took them 40 years to come up with metrics that don’t really count. We need to remind them that it is not about simplistic metrics, but about a combination of quantitative impact metrics together with qualitative stories that together better characterize the positive impact of our investments. I don’t expect impact metrics to become mainstream within the next 3 years, but early adopters will embrace them and thus take this topic to the next level.
With respect to portfolio approaches, it is very early days. The Holy Grail is that the pension funds of the world dedicate 100% of their investments to positive impact, but that will certainly take quite a bit longer than 3 years. One of the issues is that institutional capital is gated by policies that don’t allow the administrators to make the right decisions, but allow them instead to hide behind a wrong interpretation of fiduciary responsibility. The whole system right now is set up to do the wrong thing. That cannot be changed from one day to the next. The way to change the status quo is by the first five, six “100% folks” collaborating with each other, publishing their results and showcasing not only the financial performance of their portfolio but also the impact of their portfolio. This will – over time – dispel the myths that impact portfolios do not provide an adequate level of financial return as well as great positive impact. After this, it’s going to take a generation of results that will ultimately force pension funds to change their policies, which will probably take another 10-15 years, unless there is a major financial crisis, which would be the only shortcut to a more sane investment environment.
HB: What are you looking forward to in 2013?
CK: I would call it the start of a movement from social entrepreneurs to holistic sustainability entrepreneurs. The additional dimension of these types of entrepreneurs is an elevated level of awareness and consciousness with a deep understanding of humanity and the universe that goes well beyond a skin-encapsulated ego. It means the recognition of the inter-connectedness of it all and a level of responsibility towards all stakeholders of their businesses and humanity as a whole. I think social entrepreneurs are the first incarnation of this movement but it’s not sufficient. There is no path to a livable planet for all of humanity without wholeheartedly embracing holistic sustainability, i.e., sustainability from an economic, social, environmental, and spiritual perspective: bottom-up and top-down. This view will gain weight and momentum as we embark on this big change on a planetary scale, which will ultimately allow humanity to live in harmony with itself and within the carrying capacity of our beautiful planet. Everything you do with your social enterprise will have to take into account a holistic positive contribution to the planet and the universe, from a supply chain perspective, from a value chain perspective, from the perspectives of the communities that you serve, from the perspectives of all the constituencies that you have. I am confident that this discussion will progress a bit further this coming year.
More insights from members of the HUB Global Board coming up next, stay tuned!