Impact Investing | February 21, 2024

Impact investing at a crossroads

Amy Cortese and Isaac Silk
ImpactAlpha Editor

Amy Cortese

ImpactAlpha Editor

Isaac Silk

ImpactAlpha, Feb. 21 – “First they ignore you. Then they laugh at you. Then they fight you. Then you win.” Mahatma Gandhi never said it, but the truism does describe the arc of many movements for change. But nothing is inevitable.

In her annual letter on the state of the field, Fran Seegull of the U.S. Impact Investing Alliance calls for accountability, collaboration and system-level thinking about systemic crises like climate change and inequality (the Alliance sponsors ImpactAlpha’s Policy Corner). “Impact investing is at a crossroads,” Seegull writes. At stake: “its ability to generate innovative solutions at scale to the world’s greatest challenges.” 

Angst is palpable in conversations across the impact ecosystem. Even as yawning capital gaps remain for priorities like the Sustainable Development Goals, some big banks and asset managers are backpedaling on climate and diversity commitments in the face of conservative attacks. Elections around the world this year may well determine the arc of change.

Terry Mollner of Stakeholders Capital convened a group of sustainable asset managers to try to meet the moment by recasting the field as “common good investing.” How angsty are you? How are you charting a path forward? Shoot us a note, or reply to this email.

Top priority

From “socially responsible investing” through “ESG” to impact investing, investors that prioritize the common good have cast about for the best way to describe their work. “It is time that our industry’s name clearly identifies what we have done since its inception: “Common Good Investing,” argues Mollner, a longtime leader of, well, common good investing.

In a guest post on ImpactAlpha, Mollner recounts how he rallied fellow asset managers like Trillium’s Matt Patsky, Domini Funds’ Amy Domini, ImpactAssets’ Tim Freundlich, Green Century’s Leslie Samuelrich and Boston Common’s Geeta Aiyer, and his hopes to advance the discussion at next month’s Confluence Philanthropy Practitioners Gathering in Denver.

Climate retreat

The climate voting records of BlackRock, JP Morgan Asset Management, State Street and Pimco were already suspect even before they dropped out of the Climate Action 100+ network in the face of escalating anti-ESG attacks by conservative politicians. The big asset managers are “just finally telling the truth about their own stewardship practices,” said Eli Kasargod-Staub of Majority Action, which tracks proxy voting records.

Climate Action 100+ launched in 2017 to engage the biggest corporate emitters of greenhouse gases, first by pressing for disclosure and more recently for action plans to reduce emissions. Rep. Jim Jordan, chair of the House Judiciary Committee, has attacked such investor collaborations as “collusion.”

BlackRock will still participate in Climate Action 100+ through an international subsidiary, said it would “cast proxy votes consistent with decarbonization” objectives only when “clients have instructed us to do so.” It’s default: “A sole focus on advancing their economic interests.”