Editor’s Note Your money is a vote for the type of world you want to live in; make sure you’re voting wisely. In this article, you’ll learn:
Cheers! Nat Brown Editor-in-Chief Ask me anything! [email protected]
Transforming the way the world thinks about investing, and how we create value has been central to my journey as an investment professional. It has been fascinating to see how this conversation has exploded into the mainstream over the past 12 months, and is no longer relegated to niche and boutique investment houses.
One statistic that has personally blown my mind is that over half of all Australian investments are now invested responsibly, according to the Responsible Investment Association of Australia (RIAA). We clearly have further to go - I want it to be 100% - but that still represents a remarkable and huge shift over the last 10 years.
Many factors have contributed to this achievement. One key factor has been the recognition that investing responsibly does not compromise returns. In fact, what we are now seeing is that it enhances them, especially when you start to use valuation metrics such as carbon emissions and water/resource efficiency in valuation analysis. Return means so much more than what the financial industry has typically led us to believe.
RIAA are not alone in documenting this trend. BlackRock Chairman Larry Fink was quoted in a recent Financial Times article indicating he and the trillion dollar asset management firm he runs believe sustainable investing will be a ‘core component of how everyone invests in the future,” and that “we are only at the early stages.”
Starting out in 1994, in what is now known as high frequency trading, ‘what’ companies were doing was very far from our ‘churn and burn’ minds. Companies were just numbers.
It wasn’t until 2006, after quitting banking and undertaking some soul searching, that I made a life changing realisation. Unless I aligned my work values with my real life values, and love for the planet, I would be compromised and unfulfilled with my career. During this period of introspection, I started to think more deeply about the ‘impact’ the companies I had previously invested in were having - were any of them actually ahead of the curve? As an exercise, I started investigating the impact of these companies, to see if it was a viable investment universe. Low and behold I found over 700 companies globally with a market cap of over $1.3trillion - all of who were doing good in the world! From there I never looked back.
After launching a number of successful funds and impact investing initiatives in the years following 2006, in 2018 I became involved in what has turned out to be another significant ‘investment watershed’ moment for me personally - WWF Australia’s collaboration with Consensys, under the Blockchain for Social Impact Coalition.
Consensys are a world leading global Blockchain innovation company based in Brooklyn NYC. I first met them when National Australia Bank co-sponsored the WWF Future Cities Hackathon in 2017. The purpose of this hackathon was to find tech solutions to solve problems related to the United Nations Sustainable Development goals.
After judging the hackathon, Reece Proudfoot, Claudio Lisco, myself and Dermot O’Gormon, the WWF CEO, realised there was a bigger idea in creating an ecosystem platform, underpinned by the blockchain. With my investment hat on, I could see that we could address the crux of the funding issue for WWF, and that there existed an opportunity to prototype an impact investment platform that utilised blockchain to democratize impact investment and bring scale to the market.
Blockchain is not only transforming the financial system - it can be used to create exponential social impact to improve lives. At WWF, the project team and I are setting out to start that journey with Consensys. This is the next evolution of my journey to expand the viable investment universe of amazing businesses making a real impact. What started in bringing impact to listed markets is now possible and scalable in the unlisted space, mainly thanks to blockchain.
The prototype we have developed is named Impact.folio, and, very crudely, it acts as a Tinder for impact investing, matching capital to projects, in alignment with both parties’ values. It brings the missing pieces of investing to impact, by providing clear project parameters and a smart incentive aligned token mechanism that helps the community of players self-moderate. This is game changing stuff. WWF are excited - they can see big efficiency improvements, mainly in helping them deploy capital far more effectively to the right projects.
Towards the end of 2018, in conjunction with Joe Lubin, co-founder of Ethereum and founder of Consensys, we announced the pilot phase of our first Impact.folio prototype was ready for launch.
To begin with, Impact.Folio will match key project deliverables with investors, return expectations and leverage collective expertise to gain trust to fund projects. It is pretty exciting, and the first real life use case for Impact.folio will be coming very soon.
Now that we have the ground work done on Impact.folio the next ambition is to work on this for all merchant banking. The transparency, efficiency and our next level funding formulas and methods are game changers. Like Larry Fink suggests - all investment can be impact investment. As Zuper’s Investment Collective lead, projects like Impact.folio are critical to how we are thinking about creating long term wealth for members. So watch this space!
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Lisa is a seasoned investment expert, with over 20 years global investment experience in trading, arbitrage and derivatives, digital securities and portfolio management at Citigroup, National Australia Bank and Bendigo Bank. An experienced and highly respected investment professional, Lisa has pioneered the development of financial structures that have accelerated impact investment locally and globally, including National Australia Bank's low carbon portfolio and the world's first social bond to promote gender equality. Lisa co-founded Australia's first clean energy equity fund in 2007 and is a co-founder of Impact 2080, an advisory firm that specialises in innovative financial solutions for the impact sector. She is also an ambassador for Earth Hour and Al Gore's Climate Reality Leaders initiative, as well as a Mentor for AYP.