Scott Anderson

Weekly Roundup : Speaking ‘nuance’ to power

It’s only a $10 million project, but the returns could be far-reaching – and not just for a specific impact investing fund.

Unilever, Acumen and the Clinton Giustra Enterprise Partnership, part of the Clinton Foundation, this week announced the Enhanced Livelihoods Investment Initiative (ELII). Its charge will be to build up privately held agricultural enterprises as a conduit for 300,000 smallholder farmers to join the massive supply chain network of multinational Unilever. Through ELII, all three organizations will delve into their networks in India, Africa, Latin America and the Caribbean to find investments, provide capital, and provide technical expertise and capacity building for socially/environmentally inclined agricultural businesses.

“This is a big deal,” former President Bill Clinton said in announcing the three-year commitment at the Clinton Global Initiative’s 2015 Winter Meeting. “Three hundred thousand farmers may not seem like the whole world, but it’s big enough to have a provable experiment.”

Clinton, moderating the panel that included Unilever CEO Paul Polman and Acumen’s CEO and Founder Jacqueline Novogratz addressed one of impact investing’s core hand-wringing concerns: Soothing investors that over the long-term horizon, they’ll get their money back.

“How do you make the argument that you can’t lift impact without more private investment, but it has to be social impact investing?” he asked.

“Well, first, I make a plea for nuance, President Clinton,” Novogratz replied. “And by that I mean, as a world we have to get more comfortable standing with deeply held, embedded values and also insisting on excellence. To say there are always tradeoffs with financial returns and working with the poor, in many ways, is a distraction. So I would say that if we want to grow and scale solutions to poverty we have to find a way to make them economically sustainable, we have to cover our costs, and the poor understand this better than anybody else.

But it’s time to embrace the difficult, and I think we need to start looking more at investment as the means and not an end in and of itself.”

She touched on a recent study the nonprofit investment group conducted with Bain Capital, called Growing Prosperity: Developing Repeatable Models, which revealed why it’s often so difficult for smallholder farmers to adopt productivity-enhancing technologies. Many surveyed don’t want to take the risk, in large part because so many of them have been burned by untrustworthy or misleading actors peddling them. That’s why Novogratz sees a lot of promise in ELII to establish that trust and, potentially, remake the way the small farmers and the big multinationals do business.

“If impact investors just judge themselves based on whether they’re getting a financial return, it’s just another asset class. But if we are looking at how we can build a company that long- term can provide a real advantage to the farmer because they can have a steady, consistent, scaled demand from a company like Unilever … then we’re actually solving a problem, and that’s when this whole partnership gets interesting. Because at the end of the day it’s about redefining what business is, the purpose of business and how we’re going to create a more inclusive capitalism.”

Novogratz wasn’t necessarily (at least from what I could tell) speaking unvarnished truth to power. After all, Clinton isn’t exactly a hostile audience to her message. But I think she was speaking “nuance” to the power brokers in the room and the massive firms moving into impact investing. Her comments are perhaps more salient this week as we see the likes of Black Rock going big into the space.

Returns are vital and always will be. But now that mainstream acceptance of impact investing is moving with a full head of steam, it’s important not to zoom past what it’s really all about.

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impact investing, smallholder farmers