Impact Investing in Chicago: Doing Well While Doing Good

By the Backstop WIT Group

Two years ago, a group of women at Backstop created the “Women & Gender Minorities in Technology” group as part of our employee-facing diversity and inclusion programming efforts. The “WIT” group provides active affirmation of Backstop’s support of diversity and inclusion. It also strives to provide opportunities for fellow Chicagoans to take a deep-dive into the most interesting and relevant topics in the financial services industry.

One of those opportunities recently saw us hosting a panel offering real-world perspectives on impact investing and the benefits it can achieve, particularly with regard to promoting diversity and inclusion. The theme of the WIT gathering was, “The Impact of Impact Investing: How Diversity & Inclusion Have Bolstered Performance.” The goal of the event was to help educate and share experiences on the growth of impact investing and its importance in solving major problems and promoting greater social and corporate responsibility.

If you missed the evening, but would like to watch the entire panel, see below:

 Impact investing is undoubtedly on the rise. From 1995 to the present, environmental, social and governance (ESG) investing has grown from $639 million to $8.7 billion, according to the panel’s moderator, Colleen Egan, Director of People, Culture and Endless Possibilities at Clarity Partners. Among the issues those impact investors are addressing are:

  • Affordable housing
  • Climate change
  • Sustainability
  • Government effectiveness
  • New economy jobs
Those are all sizable problems, and it’s the size of the problems that’s prompting many impact investors to use their investments to try to solve them.

Debra Schwartz, Managing Director, Impact Investing at the MacArthur Foundation, noted that “the animating reason that we’ve made such a strong commitment to impact investment is that we recognize that the problems that we face in the world today are big and they’re complex and they’re tough.”

Using investments to encourage businesses to help address those problems can have results across various fronts. Among them are:

Promoting Gender Equality, Diversity, and Inclusion

Promoting opportunities for women and women-owned business are major goals of many impact investors.

Purva Patel, SVP and Head of Client Portfolio Managers at Nuveen Asset Managers mentioned that if you look at Fortune 500 companies, there are still 12 companies that have no female board representation. Impact investing “is kind of like voting with your dollars,” and ultimately could drive an increased focus on diversity at many companies, she said.

Tyra Jeffries, Founder and CEO at CreativeCap Advisors, said that one of the projects that excites her is “being able to help a woman-owned business to grow and build and access institutional capital to utilize that capital to then invest in social good initiatives.”  As we look to solve critical social and global problems, sharing ideas and supporting one another is the best thing we can do as a community of investors, tech experts or diversity-focused team members.

Supporting one another through these avenues is particularly timely as the #MeToo movement and Times Up turn a spotlight on issues of gender inequality across various industries and force companies to assess social issues in the workplace and tackle them.

Gerri Kahnweiler, Founder and Partner, InvestHER Ventures shared, “Women return higher returns and using less money, they get to profitability sooner. And we believe in that.”

Promoting Better Companies

While companies can be encouraged to help solve some of those big problems, doing so can also make them better businesses – and better investments.

“We believe diversity creates value,” said Emily Lawrence, VP, Senior Product Specialist at Northern Trust. Emily and her team think that a stable society, a healthy environment and well-governed, well-functioning companies are going to be long-term contributors to financial sustainability and environmental and social sustainability. She also noted, “We believe that entities that consider climate as a potential risk are going to be better positioned to navigate challenges going forward.”

For those who want to view the highlight reel of the evening, watch this video:

The Way Forward with Impact Investing

There’s a bit of myth busting to be done before impact investing can really take off according to Purva Patel… “There’s a myth out there that you’re not necessarily going to get the same kind of returns that you would if you didn’t have this kind of restriction on your investment universe.”

Once that myth is busted, though, “I think ultimately in the long run impact investing is going to be the way that we invest period,” she said. “It’s not going to be `impact investing’ or `responsible investing.’ It’s just going to be investing.”

If impact investing is to succeed, investors need to take responsibility for seeing to it that their investments achieve the desired effects. They need to act as owners of the entities in which they invest, holding them accountable, voting their beliefs, and tracking investments’ success in promoting their goals.

“The reality is you need the rigor of impact measurement and metrics,” the MacArthur Foundation’s Schwartz said.

The investment industry also has work to do creating impact investment products that help investors meet their social impact goals, according to panelist Nicole Chavas, CEO of Greenprint Partners.

Impact investing may not be part of every investor’s portfolio yet, but we can expect to see more and more investors looking to use their investments to better their communities, their workplaces and the world we live in.

Thank you to our esteemed panelists and attendees alike. Backstop’s WIT group is proud to be part of an amazing community in the Chicago and we hope to see you at our next WIT event!




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