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GUEST ARTICLE: Building Bridges In Thinking About Impact Investing - Part 7

Benjamin Bingham, March 16, 2018

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In a series of articles, a prominent US figure in the impact investing space explores how to pull together disparate ways of thinking about the world to show how this model of managing money should be addressed. Here is the seventh essay.

This is the seventh instalment from author, Benjamin Bingham, CFP, founder and CEO, 3Sisters Sustainable Management. He is the author of Making Money Matter/Impact Investing to Change the World (www.makingmoneymatterbook.com). His previous essay in the series can be found here and an item introducing Ben can be seen here. As ever, the views of guest authors are not necessarily shared by the editors of this news service and we invite readers to respond. Email tom.burroughes@wealthbriefing.com

Services – facilitating sustainability for all 17 goals

The purpose of this series is to help investors who want to serve human and environmental needs while meeting their own financial goals. One can imagine organizing a service around any of the 17 sustainable development goals (SDGs). The service Industry is a broad sector that includes most of the jobs in our modern economy. Since nothing is actually produced, the investor will need to decipher the trending of intangible value creation. According to the SASB Materiality Map (www.sasb.org/materiality/sasb-materiality-map/ ) the following “services” make up this sector: education, professional services, hotels/lodging, casinos/gambling, restaurants, leisure facilities, and cruise lines. What follows breaks this down into three service areas: preparing for life, managing life, and enjoying life. Whether you are a teacher of children, a lawyer trying to keep a client out of trouble or a cruise director helping an elderly person get fit, all three areas impact the quality of life on the planet. Investors can benefit when they align with qualitative trends.

Preparing for life             

Education is the most impactful influence on the culture of tomorrow. Mass produced curricula and programs that enhance test scores but leave out the imagination do not enhance quality. Educational franchises that skimp on content or best building practices to turn a dime at the expense of the children will not thrive. We cannot assume that any schooling no matter how it is conducted would necessarily improve life on the planet. However, Paul Hawkens writes in his book: Drawdown, that the education of girls is the single most important way to end global warming (https://www.amazon.com/Paul-Hawken/e/B000APTSBC) ! Educated women in developing countries have fewer children and are known to become leaders of healthy change.

We will see more and more online opportunities to learn anything under the sun. But teacher/student relationships create a pattern that runs deep and cannot be replicated by videos and robots. Look for school investments that may provide multiple returns in terms of meaningful impact and financial success. One such opportunity is a series of highly disciplined preparatory schools in Somaliland envisioned by the former hedge fund manager, Jonathan Starr, who wants to replicate the success of the Abaarso School he founded in 2009 https://www.cbsnews.com/news/ex-hedge-fund-manager-founds-school-in-somaliland/ .

Managing life    

Among the professional services that help people manage life consultants are ubiquitous and essential to the current world economy with so much change management going on, including ever-changing adjustments that will occur in the realm of technology. Consulting firms may particularly orientate themselves to the 17 United Nations sustainable development goals or not.

If the experts of this report  (https://gizmodo.com/new-report-on-ai-risks-paints-a-grim-future-1823191087 ) are right, security against the malicious use of artificial intelligence will become increasingly essential for the development of a safe and peaceful world. In Bloomberg’s Pessimists Guide to 2018 the assumption is that “false news” will kill the internet as an information source and gatherings of like minded people will mushroom! (www.bloomberg.com/graphics/pessimists-guide-to-2018/  )

On a more earthy level, environmental consultants, will rate highly if their purpose is to enhance the environment rather than to help corporations run around regulation. Private entrepreneurial social services such as an uber-like ambulance service, are likely going to increasingly replace government funded programs.

The professional services of law firms may be focused on the SDGs as well. It is already possible to invest in diversified funds that support litigation of various kinds. Class action law suits against corporations that pollute our common heritage of ocean, river, air and soil may become the most effective ways to reach the SDG goals. This was the basis for the success of Bobby Kennedy Jr’s clean up of the Hudson River from almost dead in the 1960’s, to being one of the most productive stretches of water in the world today.

Quality assurance, job training and placement services, tech support and call centers that support social services (see Communally at www.communally.tech ) are a vital part of this sector. Also, the professional services of marketing, graphic design, branding and advertising more and more will cater to those who want to promote their particular SDG solutions. Hazel Henderson, the Grande Dame  of all things Green, provides annual prizes called EthicMark® Awards to “transform advertising by demonstrating the power of media campaigns to inspire, focus on future potentials and further both public and legitimate private interests.” (http://www.ethicmark.org/about/ )

Enjoying life 
Ever since Prince Charles agreed to endorse a bonus system for hotel managers based on their impact on the sustainability of their operations, the hospitality sector is judged by its environmental footprint. Note how they ask you to consider hanging up your towel if you want to help save water! Eco tourism has taken this awareness to a new level, though adventures in fragile landscapes might have inherent environmental conflicts.

As SASB and FASB define it, “materiality” is a measure of what consumers/investors think is important.  In this sector being clean and green matters. In restaurants this extends to local and organic more and more, especially as vegan and vegetarian cuisine takes off.  Just notice the long lines outside of those eateries that are catering to conscious consumers. This, for investors, translates into better value: what is “material” to consumers is “material” to investors.

Cruise lines and leisure facilities of all kinds need to show that they are not factories but organisms that teach and heal, bringing us back full circle: a meaningful life is a never-ending school. Consumers and investors, if they are not zoned out or addicted to gambling, think that conscious sustainability is important and therefor material to their decisions in the service sector.

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