Catalytic Capital | November 14, 2019

These investors are mapping systems to catalyze structural change

Dennis Price
ImpactAlpha Editor

Dennis Price

ImpactAlpha, Nov. 14 – Say it louder for the people in the back: Impact investors can’t invest their way out of structural problems. More than 55 impact investors are putting a “whole-system” lens on issues like inequality, discrimination and resource exploitation.

Enclude’s Systems Change: An Emerging Practice in Impact Investing,” documents how investors have mapped systems to inform investment strategies. “We must be modest about the claims we make for investment as a solution,” warns Open Society Foundations’ Sean Hinton, who backed the report. Investors, he says, need to play their part “at a scale unlike anything the world has seen to date, and doing so fully cognizant of the complex systems in which they are investing.”

Some examples:

Systems mapping. Open Society’s Economic Justice Program (which includes Soros Economic Development Fund), leverages transparency and accountability in corporate supply chains to address labor exploitation related to refugees and migrants. The program backed Humanity United’s Working Capital fund, which has invested in analytics firm Ulula, training program QuizRR and traceability platform Provenance. When Economic Justice Program mapped the ecosystem for a possible investment in a sustainable fish farm, it found that fisheries were selling fish to female traders in exchange for sex. It is developing partnerships to support changes across the industry.

Market infrastructure. Philanthropic investment firm Omidyar Network is funding research, tools, training and networks to ensure digital identity truly empowers individuals, while building a “Good ID” investment portfolio that includes, Learning Machine, Terbium Labs, Cambridge Blockchain, and the Bharat Inclusive Technologies Seed Fund.

Stakeholder collaboration. Asset management firm Encourage Capital, with  ClimateWorks Foundation and the Growald Family Fund, identified an unaddressed 15 gigawatt market for rooftop solar in India. Encourage raised a $40 million fund to help India’s small businesses switch to solar, a key priority of the Indian government.