Welcome to all of the beautiful new good young moneyers who have joined us since last Thursday. We’re building a values movement, join us!
Hi 👋 hello. Welcome back! We’re looking into sustainable investing again in the light of some good news (for me), some bad news (for GYM readers) and two brilliant reads (for everyone). Thanks for being here.
The annual funding gap to meet the Sustainable Development Goals in emerging economies is $2.5 trillion. Venture capital firms are calling themselves obsolete. There’s no question that our capital system needs reform. From the outside, ESG, sustainable investing and responsible investing seem like good answers to these problems.
In The Secret Diary of a Sustainable Investor, Tariq Fancy, once a high-powered exec at Blackrock (the world’s largest investment firm), in fact the ex-CIO, wrote his thoughts on the RISE Fund:
“A $2 billion fund may be enough to bump Carole Baskin for a keynote spot at the next flashy social innovation event, but is it enough to make a difference if the majority of the global economy, with nearly $6 trillion in private equity alone and some $360 trillion of global wealth overall (3,000x and 180,000x times larger, respectively), continue operating business as usual? The RISE fund seemed like an ambitious effort that could help, but was ultimately a drop in the bucket against a tidal wave that was going in the opposite direction.”
p.s. this essay is a brilliant, must read.
Not only is sustainable investing a drop in the ocean, fund managers are incentivised by performance, have a fiduciary duty to act in the best interests of their clients (typically measured by fee to performance and risk/return ratios), and are often hamstrung in their impact goals by structures which simply do not allow them to invest.
What we need is new incentives, new approaches, new structures. The good news is, they already exist. Permanent capital vehicles, guarantee pools, search funds, patience, blending finance, and more. They’re all out there. They’re just not taught in an undergraduate finance degree.
You could learn about them in the EMBA, MBA, Executive, MCOM or MPHIL programs of Oxford’s Saïd Business School and the University of Cape Town's Graduate School of Business, or take this MOOC on Innovative Finance, or soon, you can do it by reading a book.
I’m excited to share that I’m joining Intelligent Impact as a research assistant to help Aunnie Patton Power (founder) write her second book: Carried Impact. Among many other things, Aunnie lectures the above programs at Oxford and the University of Cape Town.
Similar to your usual carry, impact carry is an incentive for fund managers to create impact. The book will be a comprehensive guide to innovative fund structures, approaches and incentives to drive social change through investment.
Practically, this means I will be pausing writing Good Young Money until I complete the research. I am more than happy to answer any burning questions about innovative / impact finance in the meantime.
Part of the research involves interviewing innovative impact funds from around the world. So, here’s where I need your help. Who do you think is doing interesting work? If there’s a fund you think should be included, please respond to this newsletter!
I couldn’t pause my writing without one last book recommendation.
There are not many feelings like that of upending your entire understanding of human history. This has been my experience reading ‘The Dawn of Everything: A New History of Humanity,’ by David Wengrow and the late David Graeber. Make no mistake this is a book by radical authors. It is, however, so favourably reviewed in the mainstream press (probably nothing).
To illustrate, a few weeks ago I wrote:
“Inequality is persistent. The history of social progress makes this clear - we have never been without inequality, rather, we have been in constant transition.”
If I were to write this now, I would say, the idea that inequality is the inevitable tradeoff of social progress is a popular and convenient narrative adopted by both radicals and liberals throughout human history.
I encourage you to pick up a copy.
See you soon!
And remember to please reach out about innovative finance. Whether it’s sharing someone doing interesting work or a question you want answered.