Smarter Money
Getting past the alphabet soup and embracing the skeptics
Impact investing is riding a wave of powerful forces, including a large generational wealth transfer, the inclination of millennials to invest with their values and the offer of solutions that appeal to people of all regions, generations and political persuasions. In many ways, its success speaks for itself.
Success brings its own challenges. Thoughtful and smart communication on behalf of impact-investing clients requires clear and compelling communications principles. Through Aspectus’ work with leading players in the impact investment ecosystem, including the Global Impact Investing Network, Big Path Capital and ImpactUs, we have developed four steps to impact investing communications.
Show impact through personal narratives. The numbers for impact investing continue to be impressive, with upwards of 90% of investors satisfied with both financial and impact returns. But what fills the narrative are the stories on the ground. The dairy farmer in Kenya who has new financial independence thanks to a solar-powered refrigerator. The family back on its feet after securing much-needed financing for affordable housing. The increased test scores of disadvantaged children enrolled in an impact investing-supported program. These are the kinds of stories that resonate and show what impact investing is all about, more so than any spreadsheet.
Get past the alphabet soup. Aligning values with investment can take many forms, as evidenced by impact practices such as: ESG, SRI and CSR and mechanisms such as CDFIs, ETFs and ITCs. While it’s necessary to understand these concepts, it’s even more important to look beyond them to explain what impact investing is and how it looks at investment capital differently — that it goes beyond avoiding doing harm and focuses on creating a measurable, positive impact. All impact investments are responsible investments, but not all responsible investments are impact investments. Responsible investing is important, but don’t let the acronyms and abbreviations distract from impact investing’s powerful narrative.
Be an alliance and networking ninja. The impact investing universe is vast and diverse, involving all manner of businesses and philanthropic organizations. Communicating impact is means working with a multitude of constituencies. Nonprofit organizations, for-profit companies, investment firms, and government agencies all have their own needs and ways of communicating. To be effective means collaborating with all these different players. Take the time to understand the needs of all the groups you are working with on a given campaign and see how you can help them drive a narrative that suits their needs.
Embrace the skeptic. The value of impact investing has been proven with research. It has earned high rates of satisfaction among its most rigorous practitioners. Demand has grown exponentially. Still, there are many skeptics. Some question the power of capital to change things. Some want to call out the potential for abuse, acutely sensitive to programs that might exploit the poor or be used as greenwashing. Remember that these critics share the commitment of impact investors to make positive social and environmental change. Resist the urge to paint them as sour naysayers. Every good argument needs its devil’s advocates. Impact investing needs a critical eye, and can withstand the utmost scrutiny. Learn to engage with the critics, invite them to look closer and be there to answer their questions.
Impact investing is still in its early stages, and that’s one of its key advantages. There is room for experimentation, and for restructuring and revision when a certain project does not go as planned. As with any investing strategy, impact investing is going to have different philosophies and approaches. Greater institutional involvement will change the field, but commitment will stay the same. The need for compelling communication is clear.
Jed Hamilton is managing director for North America with Aspectus, a global communications and public relations agency with a dedicated impact investing practice.
Four steps to impact investing storytelling was originally published in ImpactAlpha on Medium, where people are continuing the conversation by highlighting and responding to this story.
This post was originally published on ImpactAlpha.com
Visit the Invest With Values - Resource Directory to access leading investor information, opportunities, organizations, events, groups and tools.