Impact Investing: you can have the cake and eat it

Nicolas Hazard (@NicolasHazard) is the Chairman of Le Comptoir de l’Innovation and Vice-Chairman of Groupe SOS. 

Dear social entrepreneurs don’t think that there is no money out there… Actually, there is plenty! In France, the public investment bank is setting up a €500 million funds for social enterprises. In Europe, €90 million will be invested in social business through the European Investment Fund. In Seoul, Mayor Park Won Soon made social entrepreneurship one of his main goals and invested €100 million on it. In the UK, Sir Ronald Cohen created the Big Society Capital with dormant bank accounts. As you can see money is flowing here and there. But, if you want to get this money, you will have to investigate first. You need to know who you are talking to. In the end, three different profiles of impact investors emerge:

The Green washer: investors who see impact investing only as a communications tool. It is a part of their commitment as responsible investors.

A few investors see impact investing just as a sexy way to communicate. It is often about big corporations willing to sell their products and their brand. They don’t really care about social or financial impact. You just have to lure them with good stories that sell. Woo them and the money is yours!
The Peace-and-Love investor: they seek impact as the fundamental goal. It is a better way to reach their social and environmental objectives.

Impact first investors or “peace-and-love” investors seek to optimize social or environmental returns with a financial floor. It’s a type of investors that will close his eyes on your catastrophic economic results of the previous years because he simply cares about social impact. He wants to save the world, and to do good around him! He is a kind of selfless investors. They can be public authorities, private philanthropists or social minded private investors.
The Wolf of Wall Street: Two-digit investors who want to make money above all. For them, impact investments are good financial opportunities.

Lastly, financial first investors seek to optimize financial returns with a floor for social and environmental impact. They are the wolves of Wall Street. They don’t care about your stories, your projects, or the social impact. They want their money back and a two digit return. No sparkles, no gibberish, just numbers! As a consequence, they think of impact investing as a niche.

Despite the economic crisis, there has been a rising interest towards social and environmental responsibility in investment. The green washers, the peace-and-love investors and the wolf of Wall Street seek to achieve different goals. Somewhere between the three profiles that we described, you will find the true, committed impact investors. He or she needs inspiring stories, a real impact, and some good money for his old days!

 

Nicolas Hazard was speaker at our 7th Annual Conference debating on Impact Investment and Sources of Financing for Social Entrepreneurs.

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