«More transparency about impact investments will be a positive development»: experts about new Impact Currency ranking

Professor Neil Malhotra, Faculty Director of Center for Social Innovation at Stanford University Graduate School of Business

Bernadette Clavier, Director of Center for Social Innovation at Stanford University Graduate School of Business

— Neil and Bernadette, what do you like about this project?

— B.C.: The approach of counting both impact investing and philanthropy as Impact Currency without weighing one more than the other makes sense. Impact is impact, whether it is fueled by investments or by philanthropic dollars. There are many factors that come into play to transform money into impact and no evidence that some sources of money are generally superior or more productive. Producing the most impact out of existing resources is not the job of the philanthropist. It's the job of the operator.- N.M.: The Giving Pledge was a first step towards creating a culture of generosity among the world's billionaires. The Impact Currency now has the potential to create new incentives for them to channel as much money as possible into public good. This concept also normalizes using a portfolio of funding mechanisms, from gifts to commercial impact investments, to address different levels of market failures.

Reaction Founding Partners and other business leaders who graduated from Stanford Executive Program: Rui Barros, Algernon Callier, Edward Chuang, Miguel Esbri, Mario Ferro, Brian Fleming, Nuno Gonçalves, Hassan Kadbi, Bilge Kagan Ozturk, Dan Matthies, Olga Paxson, Carlos Peredo, Valery Vavilov, Jose Zurstrassen

— You have challenging schedules, running banks, companies and important initiatives. Why did you decide to get involved with the Forbes Impact Currency project in your free time, which you don't have?- If we as individuals begin to make better decisions on where we invest our time and capital, then collectively we can quickly change our trajectory for the benefit of our planet and humankind. The Impact Currency project is designed to motivate people who have obtained their status in history by solving big problems in their respective domains, to bring that same heart and tenacity to solve even bigger, real world problems.

Reaction assisted in creating the Forbes Impact Currency methodology because the project's goals fully align with our mission. Reaction was founded by 150 business leaders who, upon completing the Stanford Executive Program, committed to improve a billion lives within a decade, by scaling commercial innovations that can change the world. The Impact Currency project promotes this objective by increasing awareness and directing society towards a world where success is measured not only by money made, but also by using that money to make a difference for people and for our planet.

Professor Jeffrey Pfeffer, Stanford University Graduate School of Business

— Professor Pfeffer, you specialize in organizational behavior. In your view, can the Impact Currency project change the way the wealthy businesspeople invest their money?

— Your emphasis on incentives is correct. It might work. People are competitive – it’s a good motivation that you tapped into.

Christian Seelos, Ph.D., the Director of the Global Innovation for Impact Lab at the Stanford University Center on Philanthropy and Civil Society

— Doctor Seelos, in your position as the Director of the Global Innovation for Impact Lab at Stanford, you are consistently studying impact innovations. What advice would you give to the Forbes Impact Currency ranking project?

— Regarding the Forbes Impact Currency project, my advice for any organization that wants to make a real change is that it should be prepared that it will take a lot of time. Make small steps, like in a ratcheted landscape. Climb the next little hill, to have a better view of the horizon, and what’s next.

Jay Jakub, Ph.D., Chief Advocacy Officer, Economics of Mutuality; coauthor of books Completing Capitalism (2018) and Putting Purpose into Practice (2021)

— Doctor Jakub, as one of the lead authors of the Economics of Mutuality that is now being taught at the Saïd Business School at the University of Oxford, what are your views on the potential of the Forbes Impact Currency project? 

— The vision of the Forbes Impact Currency ranking that wealth is more about «noble worth» than «net worth» proposes a performance model that corresponds to the next era of capitalism  — an era in which a more complete form of capitalism will emerge to differentiate the capital that has positive impact on society, the environment, and the economy. This new index is aligned with the Economics of Mutuality — a management innovation now taught at Oxford and applied across a growing number of companies so that «they can thrive by meeting the needs of the world».

Tony Siesfeld, Managing Director of the Monitor Institute by Deloitte

— Tony, you are not only the Managing Director of the Monitor Institute by Deloitte, but also one of the leading authors to the famous Reimagining Measurement report. How do you view the fact that the Impact Currency project does not count the results obtained, but counts the funds invested in various ways?

— I totally understand the idea behind the Impact Currency concept. You will be criticized for measuring input, but it is a good place to start. With your concept, you are counting an attempted contribution of billionaires to what they view as public good…..Impact investing and philanthropy largely do different things with capital, but can be directed sometimes towards the same goals. It’s like looking at a portfolio designated for good: you may invest a part of it in philanthropy grants, a part in no interest loans, a part in impact investments — it’s all part of the Impact Currency portfolio. And with its new ranking Forbes is trying to increase the pipeline of the funds flowing into that portfolio, I see the logic in that.  

Professor Baba Shiv, Stanford University Graduate School of Business

— Professor Shiv, how do you view the methodology of the Forbes’ Impact Currency ranking project from the standpoint of neuro-economics as your specialization?

— This is an amazing project, it may have a really big effect. It’s important to keep the process positive, and to capture the generosity of those who give. I like that you put an open-ended question about the businessman’s priorities right at the beginning of your questionnaire. It encourages thinking about the future, not just about what was done in the past.

Rachel Bass, senior manager, research at The Global Impact Investing Network and the lead author of the new methodology for standardizing and comparing impact performance being prepared by GIIN

— The methodology for the Impact Currency ranking by Forbes in Russia contemplates calculating a whole range of contributions to impactful projects, from charity to impact investments, and even taking into account some aspects of corporate social responsibility. Given that the GIIN focuses specifically on impact investing, what is your opinion with respect to such a wide spectrum?

— To understand one’s impact, it’s useful to consider a broad set of activities, including ESG and impact investing as well as philanthropy or charitable giving. Each of these can enable positive outcomes in different and complementary ways.

Guy Pfeffermann, Ph.D., former IFC Chief Economist (and World Bank Chief Economist for LAC prior to that)

— Dr. Pfeffermann, your career has been focused on the economics of sustainable development in the organizations of the World Bank Group at the highest level, as the Chief Economist. How do you assess the economic aspects of the methodology for the Impact Currency ranking prepared by Russian Forbes?

— The methodology for the Impact Currency ranking that I reviewed appears logical. Naturally, I did not recheck the research that went into it. Conceptually, Forbes’ counting just the input (contributed funds) for the Impact Currency ranking is the correct approach. Counting outputs (the effectiveness) is too difficult, it would have been a task of pharaonic proportions. Actually I believe that all philanthropy is full of leaking buckets, it is generally not very efficient; but I agree that if the Impact Currency ranking increases the flow of funds, more good will come out on the other end. I also agree with the point of view that the bigger flow will create more efficiency because businessmen will care more about the funds contributed that way. Overall, more transparency about donations and impact investments will be a positive development. Even if you have just 10 millionaires, it is enough to start the process, next time more will join. Maybe Forbes should consider taking this issue to the World Economic Forum.