Impact: So What’s The Big Idea, Then?

This impact story provides a general overview of what ‘impact’ is all about.

It was originally used as the text on our homepage but then we realised that it was probably a bit too long!

Reading time is about 5 to 10 minutes.

If you’re the parent of a budding impact thinker, this story (like all of our stories) doesn’t contain profanities or age-inappropriate material. But it does contain descriptions of wealth inequality and other global problems that you may not want to pass on just yet.

Text: Daniel Rosehill. Graphics: DALLE3.

Like that time when we put a sloth on the moon (but the World Cup was going on so you’re probably just hearing about it now)

We’ve developed artificial intelligence platforms capable of bringing our strangest mental images to life in mere seconds

We’ve perfected the development of electrical appliances whose sole purpose is to boil eggs more effectively

(No, really. Go on Amazon)

But … we’ve also created a climate crisis that threatens the very existence of our planet … including those who had nothing to do with creating it

Our societies have become more prosperous … but also starkly unequal. In 1965, the average CEO-to-worker pay ratio stood at 21 times. In some cohorts today, it’s more than 600 times.

Institute for Policy Studies

For all the rhetoric that’s been spoken over the years about furthering equality between nations, huge gaps still exist between countries – and the developed and less-developed world

While some nations create cutting-edge research programs, others grapple with widening access to basic literary

(For the purpose of this description fact have been simplified. Poverty exists in developed nations too).

It’s not been that long since the world seemed like an altogether more hopeful place.

When the idea that a strong work ethic and an ambitious dream were the only prerequisites to doing really well, wherever you started out

Today, thoughts like these risk sounding idealistic and naive.
Instead, we’re more likely to find ourselves wondering:

What Happens When We Neglect Impact?

Impact argues that much of the explanation has to do with the fact that our economic system has basically ignored the far-reaching ‘impacts’ on people and planet that companies often have.

Its conviction is that by changing that we can not only claw back some of the damage we’ve done to our world, but also begin moving in a wholly more positive direction.

Why the financial lens, you might be wondering?

Impact is a financial movement.
You might be wondering why we need do-gooder bankers to help us solve our problems?

The impact movement is brimming full of amazing financial professionals who want to make the world a better place and equally wonderful people with non-financial backgrounds.
But that’s maybe besides the point.

The real answer to that question is because the global financial system is huge and so many important impact projects require money to fund them.

According to Boston Consulting Group, by year end 2023, there was $120 Trillion worth of global assets under management (AUM)

Think about all the money that’s:

Invested in the stock market

Issued by governments as bonds

Saved into pension funds

Invested via sovereign wealth funds, through family offices … the list goes on and on (as does its potential for generate impact!)

If all that money could be invested according to impact principles, an awful lot of good could be achieved!

It’s also pragmatic.

We use money to determine value in society.

If we can interject “impact” into the equation, we can try to steer all our purchasing decisions towards things that are good for the planet.

It could also help us to:

Close The SDG Funding Gap!

Well, it looks like those guys got there first. This is what you get for hiring animals as narrators, I guess.

In total there are 17 SDGs.

Collectively, they represent an enumeration of some of the most pivotal challenges facing humanity – and our ambitions to fix them (1 is “no poverty”; 2 is “zero hunger”)

The SDG Financing Gap represents how much money we (the world) need to meet the sustainable development goals (SDGs)

That gap has been estimated to be in the region of $4TN (trillion US dollars) per year

That may seem enormous, but don’t despair just yet.

As we have seen, while that’s a big number, there’s still much more money than that flowing through the global financial system:

In other good news, in 2022, impact investing passed the $1TN mark (GIIN)

That’s not where we need impact to be.

But it’s still a hefty number.

It was an important milestone for the industry.

We took a moment to celebrate it.

We hope you did too.

Increase public-private collaborations

Direct more privately held money into impact-positive funds

Scale individual impact projects with the help of outcomes funds

(There are countless more ideas)

The normative economic system today encourages companies to focus exclusively on profit-maximisation while hoping that they will also spare a thought or two to their broader impacts (see: impact vs ESG, later).

Often this is all boards and investors want to see.

In other instances, boards actually have a legal duty towards profit maximisation.

This means that Boards of Directors are legally constrained by an obligation to maximise profitability.

Crazy, no?

Financially Viable
(Good for themselves)

(Good for the world)

(The juxtaposition of sloth photos and other points on this website is always unintentional. We are not and have never suggested that B Corp is staffed entirely by sloths)

Text: Daniel Rosehill. Visuals: DALLE3 (OpenAI)