A roundtable discussion with:
Mike McCreless, Executive Director, Impact Frontiers
Kelly Gauthier, Managing Director and Partner, Rally Assets
Kevin Teo, Chief Operating Officer, AVPN
Hosted by Akira Nakahara, Founding Partner at A/B Partners and Senior Advisor, Impact Frontiers
Impact Frontiers is launching cohorts in Canada and Asia with regional partners Rally Assets and AVPN.
The goal: to accelerate investors’ integration of impact alongside financial risk and return into their investment practices. Secondly, to make this available to the widest possible number of investors possible.
To better understand the opportunity for investors considering joining the global community gathering behind this effort, we sat down with those leading this multi-national cohort launch.
Akira Nakahara : Mike, can you tell us a little bit about the origin of the effort? Where and why did Impact Frontiers come about?
Mike McCreless (Impact Frontiers) : Impact Frontiers originated at Root Capital, which is a social investment fund that lends to agricultural businesses in Africa and Latin America. Root Capital sought a way to increase impact while still being responsible stewards of investors’ capital. It also faced a larger challenge common across many investors which is how to integrate impact alongside financial considerations in their decision-making more concretely and effectively.
As the effort grew, it migrated to the Impact Management Project (IMP), a non-profit forum for building global consensus on how to measure, manage and report impacts on sustainability. Through a pilot cohort from 2018 – 2020, Impact Frontiers generalized Root Capital’s approach to be broadly applicable across investor types and asset classes. We also internalized the IMP’s approach, building consensus in the most accessible, open-source way possible.
Akira: That brings us to the global effort launching now in May. Kevin, can I turn to you – what drew you and AVPN to this partnership?
Kevin Teo (AVPN) : AVPN has been a Strategic Partner of the IMP for years, and so for us, this simply seems like a natural next step. In Asia, the IMP is known for helping investors to make sense of the different standards and frameworks that already exist for impact, and bringing clarity to what can be a confusing space. Impact Frontiers is aptly named, because it is truly at the frontier of implementation! It enables investors to implement good impact management practices, and to integrate impact management alongside financial risk and return. It’s not creating new standards, but helping investors make sense of and use the standards, frameworks and guidance that already exist.
Akira: Kelly, how does that resonate with your experience in the Canadian investing market?
Kelly Gauthier (Rally Assets) : It resonates strongly. Responsible investing is now mainstream in Canada but right now a few key challenges are stopping the field of impact investing from growing as much as it could. I’d highlight three things in particular:
Confusion: The proliferation of standards and frameworks for measuring and reporting impact has created confusion for investors about language, intention and actual impact performance.
Data: Without robust impact measurement, many asset managers are challenged to make the case for investing for impact.
Analysis: Asset owners that are seeking to invest for positive impact find it difficult to tell the difference between asset managers with robust impact investing approaches and those that are ‘impact washing.’
Kevin: Yes! The whole marketplace is addressing this issue of impact-washing, of just doing the minimum to get away with claiming impact. Convergence of ESG and impact standards is already happening. We see concepts like the IMP’s “five dimensions of impact” agreed to by the IMP’s consensus-building process as raising the bar on impact management practices, and Impact Frontiers as pushing up the ceiling on how impact informs investors’ decisions.
Akira: Wow, that’s a bold statement! But there are a lot of initiatives that investors could participate in. How is this different?
Kelly: I can tell you that there’s certainly nothing like this in Canada! Part of what makes Impact Frontiers different and so powerful beyond its flexibility is its global approach and scale. It’s building on the IMP’s global consensus on how to measure, manage, report and communicate impact, and taking it to the next level of integrating impact into investment decision-making. I’m excited that the global nature of the initiative will bring much-needed shared understanding.
Akira: Kelly, there are a lot of partners involved in the Canadian effort. I saw Canvas, Common Approach to Impact Measurement, MaRS, Responsible Investment Association, Social Value Exchange, and TIIP. That’s quite a group! They’ve clearly responded positively to this initiative. How did this come about?
Kelly: We wanted to make this something that all of the players in the Canadian ecosystem could participate in, contribute to, and benefit from. It’s not a proprietary, branded approach of any one organization. Investors in Canada who are interested in joining can be confident that there is room for them no matter where they are starting from and that their peer group includes established players who are committed to making this an ecosystem wide effort in Canada.
Akira: Mike, let me bring it back to you. Obviously there is great excitement about this phase. How do you see the effort growing over time? What can this look like in five years?
Mike: Any investor that wants to integrate impact into their investment decision making will be able to, by following an established process and examples set by other investors. That’s our vision within five years. They would have different routes they could take – for example, by participating in an investor cohort led by an industry association or network of which they are already a member. Or, for investors that prefer to work on their own, we are also creating and sharing open-source content on our website. As a non-profit, our mission is to support the greatest possible number of investors to integrate impact into their decision-making, as quickly as possible. To do this, our strategy is to grow through partnerships with industry associations and to publish everything on an open-source basis. This is why we’re so thrilled to be launching these partnerships with terrific partners like AVPN in Asia and Rally Assets in Canada.
Akira: Ok, so for an investor interested in this, what is their next step?
Mike: Reach out! But don’t wait too long – the cohorts in Asia and Canada are launching right now in May. Asian investors can reach out to Kevin at kevin [dot] teo [at] avpn.asia and visit avpn.com for more information. For Canadian investors, reach out to Kelly at kgauthier [at] rallyassets.com and visit impactfrontiers.ca.
Akira: Thank you all! For those interested in how the cohort model works, there is a short 3 minute video that covers the basics here.
