Julianne Zimmerman | May 29, 2018

I am a fiction reader.

Lately I’ve been indulging heavily in science fiction and “strange fiction” by N.K. Jemisin, Iain M. Banks, Steven Erikson, Octavia Butler, China Mieville, and others.

At first blush that may not seem directly relevant to the Reinventure Capital proposition or to this blog, but as Ray Bradbury preached in Fahrenheit 451 — and as my literature degree validated in my own experience — engaging fiction challenges our preconceptions, urges us to ask better questions, and prepares us to see new connections, new possibilities beyond the status quo.  And great fiction continues to inspire us, decades or even generations after its publication: Michael B. Jordan stars in a reimagined Fahrenheit 451 that released just last week.

That’s partly what prompted me to share some important intersecting ideas from several nonfiction authors on transforming finance and business.  And since it’s the unofficial start of summer, you might even feel inspired to include these and other thought-provoking titles in your summer reading list.

Getting real

To orient us firmly in the nonfiction realm, it seems only right to start off with Morgan Simon’s framing of what’s real, from her book Real Impact:

Let’s start by getting real here.  Real is the harm that the global economy has caused through centuries of extractive practices.  Real are the challenges that decades of ineffective charitable work have caused in covering up structural economic problems that ensure the persistence of poverty and inequity.  Real is the potential for a new field called impact investment — the practice of investing not just for profit, but also for social benefit — to completely restructure the global economy, making social and environmental responsibility integral to how we move money through society, rather than an afterthought.  Real is the fact that impact investment is already being done on a massive scale by a limited number of people.  It’s the trillion-dollar trend most people have never heard of.  Real is the fact that impact investment is in danger of replicating the same mistakes of the aid industry by focusing on palliative rather than structural change, and by choosing outside “experts” as its leaders, rather than responding more to those whose expertise is grounded in a lived reality.  Real is the opportunity we have to get this right.  We can transform the way impact investment has often been practiced, scaling interventions that actually create long-term, systemic impact and that stay accountable to the communities they aim to serve. [p. 1]

I would add that the opportunity in front of us right now is not only to transform impact investing, but to transform our entire economy to become much more real.

To be sure, investing for transformation will require lots of approaches, methods, instruments, practitioners, etc.  But our current economic system is neither sacred nor immutable — it has evolved over time, a dynamic output with many variable inputs — so system change is not only possible, it is intrinsic to human civilization.

The operative question is what kind of change we will make, and whether we will make it consciously, generatively or negligently, self-destructively.

Curiosity disrupts conventionality

If you are new to this field, it might be reassuring to know that system transformation is already happening.  Ed has been at it since the 1980s, long before most of us thought about impact investing, let alone put it into practice!  Although Ed was a pioneer, there were others before him, and he has had highly influential contemporaries along the way.

In The Clean Money Revolution, Joel Solomon offers multiple profiles of people (many of whom we know as allies, collaborators, and friends) who have become significant thought leaders and change makers as a result of asking questions about how finance might be realigned to ethical purposes, to deliver a more comprehensive set of objectives than simply making more money.  As one example he relates the following:

Wayne Silby is another leading light pioneer… He launched Calvert in 1982, he says, to get rich.  “It wasn’t a crusade.  Actually we got kind of lucky, we were one of the first money market funds…And so in my twenties we were already managing over a billion dollars.”  During a period of exploratory world travel, a conference on the Buddhist tenet of “right livelihood” got Wayne thinking about how to give back.  His mulling of these concepts ultimately inspired him to help move the rudder of global finance. “We were the first fund to say, ‘Well, we want to set aside a small part of our monies for social justice issues.’  We weren’t sure if it would capture other people’s imagination, but it felt true to our values.  It got a lot of notice in the press, but a lot of Wall Street was like, ‘These guys are still on drugs!’”  Calvert was an early giant of SRI or socially responsible investing… Offering SRI products required researching stock exchanges and evaluating companies for best and worst practices.  This gave stock pickers and wealth managers a tool to “offer better companies” for clients.  A new choice was birthed.  SRI ratings and funds became a foundational influence at the roots of the clean money revolution — the first big, values-based product for the financial industry. [p.101]

All these years later, SRIs are still taking hold, evolving, expanding — and still receiving pushback from Wall Street.  And even if SRIs reach their fullest application, they will be one disruption among many, Wayne one change maker in an expanding community.  In the last few years momentum has grown dramatically, as many more people have joined the fray.  Even so we are in the early stages.  There is plenty of room for many more change makers to ask better questions, improve on existing disruptions, and create new impact investing choices.

Economics is in all of our hands

You might also take comfort in knowing that leading isn’t limited to those at the forefront of the financial sector.  Rodney Sampson drives home the point in Kingonomics that all of our economic choices have impact, either to reinforce the status quo or to shift it.  Thus regardless of our station in society, making conscious choices is both our greatest source of transformative power and also a civic obligation:

The beauty of economics is that it truly is in our hands, to a large degree.  We can control how we spend our money, how we conduct business, what kinds of products and services we offer, what kinds of team members we employ, what kinds of values we want to pay for, and what kind of values we want to sell… We can now shape our little corner of the market as never before.  We have fresh new opportunities to make the changes we want to see in the world… No one can tell us how to spend our money or what values our businesses can embody.  We have the freedom to make those choices and, in so doing, to change the world, a little bit at a time… We have to take the reins, each and everyone of us, no matter our color, culture, or creed.  We have to be the ones who change, deep in our own hearts.  And we need to carry out that change in the world by the way we leverage our checkbooks and our business plans.  We must learn to make fully conscious economic and business choices that reflect the deepest values we believe in. [p.227]

These principles of economic freedom and civic obligation apply to all — private citizens, business owners, investors, advisors, everyone.

If you want to change the world, change your mind.

And yes, that civic obligation is also a fiduciary responsibility.  Bonnie Foley-Wong explicitly ties our individual duty back to disciplined investment.  In Integrated Investing: Impact Investing with Head, Heart, Body, and Soul, she makes a compelling case that although we think of finance and economics as being impersonal, rational, and based soundly on “who wins,” that is exactly the misguided mindset that drives the worst of our status quo.

Bonnie argues we must embrace the fact that investing is a human endeavor, with human objectives; human values, beliefs, and emotions; and impacts on real people.  Absent this shift in perspective, our best intentions for positive outcomes will only propagate the same old destructive patterns.  The excuse of following established practices simply doesn’t hold up under rational and moral scrutiny.

Or as Erika Karp recently proclaimed, investment professionals who do not systematically incorporate material impact considerations into their decision making process are “breaking their fiduciary duty and should not be in the market.”

So it is in finance, as in all other human endeavors, the biggest and most transformative change we face is the one within our own minds:

If we are going to really change the landscape of investing and have a positive impact on the world around us, we need to change how we think about investing and how we make investment decisions.  This change starts with looking at the products and services we buy and the activities we undertake — including investing — as more than just things we consume… We need to think again about why we invest in the first place and about how our investing activities and investment choices express our values and align with them.  We can be more holistic about how we make investment decisions and use all the inputs available to us… We need to shift our mindsets before we invest. [p.182]

Make it so.

As all four authors (and Erika) demonstrate, you can do this.  And as they all make plain, there is no justification not to.

Here’s Morgan again:

“At the end of the day, this is my advice to you: Take advantage of every opportunity to work for justice, with every dollar, every word, every action.  Listen.  And keep asking questions.” [p. 216]

For our part, Reinventure Capital is working to deploy equity and debt capital in expansion stage (breakeven or so) companies led by people of color and women, across the US.  It’s a big departure from the status quo, and we believe that backing undervalued founders to grow profitable enterprises is an important way to contribute to changing our system for the better.  Because we ask different questions, we see an incredibly vibrant and robust opportunity pool, representing phenomenal economic, social, environmental, and technological change potential.

And we know we are not in this alone.  We are keen to hear from you:  what questions are you asking, what opportunities are you seeing, where are you taking action to effect transformative system change?  How might we join forces for good?

Please share!


While there’s no such thing as a guarantee in investing and no one can reliably predict the future, Ed’s prior track record provides direct evidence that it is indeed possible to consistently invest for both financial returns and social value creation.  If you are an accredited investor and would like to learn more about investments that can promote systems change by supporting high-value companies led by women and/or people of color, please contact us to start that conversation.


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