Impact investing: The mindless mantra – ‘doing well by doing good’

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On the recommendation of a few people in the impact investment community I am reading ‘Winners take all: The elite charade of changing the world’, and although I’m only a third of the way through, I’m already reeling. By next month you may find me with my head in my hands – it wasn’t the best pick for a cheery holiday read. 

Author Anand Giridharadas’ depiction of the Silicon Valley elite evangelizing its role in saving the world, while failing to recognize it has become part of the problem, is both startlingly harsh and obviously fair. 

Also fair is his point that, as banks and consultancy firms market themselves as institutions that can change the world in their bid to attract graduates, they are diverting attention from the public sector, which has real power to change systems through good old-fashioned legislation and regulation, and is in dire need of bright, forward-thinking, enthusiastic people. 

My takeaway so far is that the ubiquitous mantra of ‘doing well by doing good’ chanted by tech entrepreneurs and impact investors encourages a mindset that says: ‘I will do good and I welcome good only if it is not painful for me or society.’ 

But to bring about fundamental change such as greater equality or a greener planet, and – importantly – to find long-lasting solutions, isn’t always pretty and it is certainly not always a win-win in the financial sense. 

Who loses and who gets to choose who loses is important – as France’s president Emmanuel Macron is learning the hard way, having ignored other countries’ successful efforts to implement carbon taxes by targeting corporations and not the working class. 


There was a philanthropy survey by BNP Paribas several years ago that has always stayed with me. It asked wealthy individuals around the world what inspired them to give and do good. 

In Europe, the majority responded: Because it is my duty. In the Middle East: Because of my religion. And in the US: For the personal experience. 

Only in Asia did the majority of people feel ‘doing good’ was neither obligatory nor offered some personal kickback. Rather they answered that their philanthropy was motivated by a desire to give back. Why? Because people are less disconnected to poverty in Asia? Because communities are tighter or the wealth is newer? I can only guess.  

It is important amid the current arguments around sustainable investing and social entrepreneurship to consider whether we are really looking for solutions or just quick fixes 

Implicit in this notion of doing well by doing good is that no one really wants to rock the boat or do the hard work for positive change. There was an excellent survey recently published by New York University’s Stern School of Business and The Tent Partnership for Refugees. It surveyed consumers of several brands to see if they viewed those brands more positively if they were helping refugees – they did. 

What I liked about this survey was it actually went much deeper, asking what solutions in particular do you support these brands doing: hiring refugees, including refugee-owned firms in the supply chain, or donating, or something else? The solution that most appealed to consumers was if their brands provided financial, educational or other similar services to refugees. 

What they did not care about at all was whether or not those brands were advocating for the US government to resettle refugees. By far the biggest impact for the largest number of refugees would be if the US opened its doors, yet consumers cared little about this point. Again I’m left wondering why. Do people only want solutions if they are easy? 

If that is because people no longer trust governments to solve issues, I don’t blame them. It is understandably more appealing to work for, or invest in, a company that gives shoes to the homeless than to work with basket-case politicians to eradicate homelessness.

Quick fixes

But it is important amid the current arguments around sustainable investing and social entrepreneurship to consider whether we are really looking for solutions or just quick fixes. I’m grateful to Giridharadas for pausing to question what will really create positive change. 

My personal belief is that we should (and need to) use finance and private markets to solve some of the world’s social and environmental challenges, but we also have to be sincere as we do so. Are green bonds really a solution? Wouldn’t you have more impact by not financing that pipeline? 

Does the fund you launched that invests in female entrepreneurs improve gender equality, or would greater impact be made by promoting some of your female employees? And can we talk about whether philanthropy and/or investments are the right or wrong solutions? Are there better ways people can use their positions or expertise to influence change? Is the financial industry really best placed to make decisions about solutions? And let’s revisit the term ‘win-win’ and discuss if one of those wins has to be personal? 

Impact investing, corporate social responsibility, social entrepreneurship and sustainable finance have been given something of a pass up to now, perhaps because we wanted to allow a new way of thinking to take root. But it is time to question that pass so that we end up with long-term solutions and not an empty slogan.