As the Global Impact Investing Network (GIIN) meets in Paris, I thought I would add some provocative tonic to conversations about the field. Reflecting on four decades as a social entrepreneur, and 23 years of investing in small enterprises I want to recommend the following:
Where does all this come from? I have tried to spell out the logic behind these ideas in two prior blogs: You can find them on LinkedIn, or elsewhere on this website
https://www.linkedin.com/pulse/impact-investing-whats-point-cedric-de-beer/
https://www.linkedin.com/pulse/impact-investingmarket-mythologies-cedric-de-beer/
The universe of international development has become very seized with “problem statements” and “theories of change”. In many institutions every project proposal and strategy document is required to spell these out, which is odd if you think about it: you can’t have a new theory for every course of action.
In a previous blog I quoted an article by 15 prominent economists in the
Guardian (1) identifying that addressing the structural roots of poverty “requires changing the rules of the international economic system to make it more ecological and fairer to the world’s majority. It is time we devised interventions and accountability tools appropriate for this new frontier.”
That sounds to me like a good problem statement for the impact investing community to apply to all its work.
What kind of changes and interventions are needed? A good place to start would be “Doughnut Economics” by Kate Raworth (Cornerstone 2018). She does a great job of showing how economic theory and practice have led us to the brink of the ecological disaster and worsening crisis of inequality and poverty confronting the global community as whole. Its difficult to read this book and come away thinking that any kind of a solution lies in more of the same: - extending the markets to places “that have been left behind”
Raworth sets 21s Century economists the task of laying the basis for a new economic order, in which the markets, the state, the family and the commons all play a role in serving humanity. It would be wonderful if impact investors and social entrepreneurs could join that journey.
I urge everyone to read this book and others that are starting to challenge the orthodoxy which has dominated economics for the past four decades at least, and to begin to think and act like 21st century impact investors.
I don’t claim to know exactly where this would lead, but it is a journey we should all begin, and help each other find the way. I plan to write about possible directions investors might take in future blogs. I hope others will join the conversation.
(1)Buzzwords and tortuous impact studies won't fix a broke aid system. Guardian. July 16, 2018
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