You Didn’t Build That, Part 1

AN INVITATION

A few weeks ago, Lisa Woll, the CEO of US SIF, asked me to join a plenary panel for her organization’s annual meeting. Flattered, I nevertheless declined. Why? Easy. Because I felt that my oft-repeated stance on investing for systemic change in the public markets is, well, let’s just say “not perfectly aligned with US SIF’s marketing.

I hold in high regard Lisa and her team’s work to educate investors and asset managers on the importance of integrating sustainability into financial systems and the investment chain. And I agree that expressing one’s values in financial systems is a critical first step for any impact investor. I also agree with the theory (and frequently with the practice) of collective action. However, I disagree – sometimes vociferously – with the idea that public market security selection is a forcing factor in corporate behavior change.

I know Lisa, not well but certainly by reputation. She is a thoughtful, passionate, whip-smart, and brave leader. Via a surprisingly candid email exchange, she insisted that my perspective – an admittedly provocative call for intellectual honesty in the world of sustainable investing – is important and even necessary. For with Blackrock’s much ballyhooed entry into the discipline, and the surge in interest in impact investing, one would be excused for fearing the dilution into meaninglessness the concept of non-financial value creation. That my perspective also extends to the giant good-washing exercise otherwise known as the UNPRI, and explains why we (Caprock) are NOT signatories, is just icing on the cake.

Such was the conviction that Lisa demonstrated that I checked myself and visited US SIF’s website, digging around for a good reason to not fly across the country… again. And, surprisingly, I discovered that my sense of their mission was a bit out-dated. A lot of their marketing focuses on embedding sustainability through a business’s supply and value chain, and throughout the financial services industry. Yet I also suspect that much of the language on the website is aspirational. Why do I so believe? Because I attend a lot of impact conferences and have invested in a lot of impact deals and I have yet to encounter any US SIF presence. So perhaps Lisa wants to drive US SIF into a more relevant position in the impact eco-system. Perhaps she sees the future and realizes that it incorporates the full array of asset classes. Perhaps she simply believes that a strong, outsider voice would be useful as she pursues an evolved strategy. We’ll see.

So I’m going. And, in truth, and despite my admittedly skeptical tone above, I’m excited. In part because I believe that sustainable-investing-cum-values-aligning is one important piece of the much larger puzzle related to the evolution of the capital markets. In part because I believe in both emotional passion and intellectual honesty. And in part because Lisa has authorized a healthy dose of provocation. Which is awesome. I enjoy few things more than talking to a room full of captive, quasi-hostile financial professionals with the mandate to piss them off. Yay, me.

Yet I recognize the very real possibility that there may be some institutional resistance to my (our?) message, particularly if I enter the room with a bazooka on my shoulder. In order to build an on-ramp to the message, I’ll need to explore my inner Switzerland (I’m a diplomat!) while simultaneously channeling a little North Korea (I’m insane!). And since I fundamentally believe that changing the capital markets is an evolutionary, rather than revolutionary, process, I must figure out – in collaboration with a bunch of thought-partners, many of whom you have read about in other blog posts – how to create the conditions – particularly in this community – for positive adaptation. As we all know from Darwin, these conditions are best manifested in the form of environmental hostility.

Perfect.

I’ll show you the scars after the conference.