Impact investing and chess: what do they have in common

Фото Ben Pruchnie / Getty Images
Фото Ben Pruchnie / Getty Images
Chess players know to make multipurpose moves: for example, developing a piece, protecting a piece and attacking your opponent — all in one move. Out of many varieties of combinations, multipurpose moves are often the best

Impact investing, by definition, is a multipurpose move: it is designed to achieve both impact and profit. Let’s explore to what extent impact investing can be also multipurpose in terms of types of impact.

The UN member states have adopted the 17 Sustainable Development Goals (SDGs or the Global Goals), to be achieved by 2030. They are designed as a blueprint for peace and prosperity for people and the planet and became the globally recognized call to action to solve the world’s challenges. 

According to the Global Impact Investing Network (GIIN), 73% of impact investors track at least some of their investments’ performance toward the SDGs and, on average, target 8 out of the 17 Global Goals at once. Are these statistics indicative of a trend for massive Global Goals multi-purpose moves or a tendency for what I call «impact-harvesting»? By «impact-harvesting» I mean identifying or retrofitting extra SDGs with the main goal of reporting them rather than making a difference in the world.

Let’s ask Grandmaster Timur Gareyev, who holds the Guinness World Record for the most blindfolded simultaneous chess games, about the end result of multipurpose moves. The Grandmaster confirms that multipurpose moves increase the chance of success. But he warns that pursuing many goals at once disperses too much energy. If the renowned chess player is not a fan of pursuing too many goals, how do the 300 impact investors who participated in the survey pursue an average of 8 Global Goals at once (or even 9, if we also count profit generation)?

The Global Goals are an inspiration for mankind, and should be used as such:

But just inspiration is not enough to make a decision on an impact investment. A solid body of literature exists to guide investors, fashionably called roadmaps, compasses and other navigation tools. One of the most user-friendly of such tools is «Five Dimensions of Impact» by Impact Management Project.

 

Among other methods, there is an Impact Compass developed by the Center for Social Innovation of Stanford Graduate School of Business. «We initially designed this tool for students interested in evaluating the impact potential of organizations they hoped to join,» says Bernadette Clavier, Director of the Center. Professor Malhotra adds, «Now with this Impact Compass, we can compare the outcome potential of different projects».

The Global Goals by themselves, however, were not designed as a tool for sorting projects into those that are impactful and those that are not, nor as an accounting tool. Applying some broadly-drafted Global Goals too literally, and without using designated decision-making tools, may render unintended results. 

The CEO of an impact company once proudly told me, in response to a question about targeting impact: «All our projects meet at least one SDG. Actually, SDG No. 8 is so easy, we always mark it as done.» It is likely not a coincidence that, according to the GIIN 2020 Annual Survey, the largest number (71%) of impact investors target SDG No. 8. Global Goal No. 8 is «Decent Work and Economic Growth» — a noble goal, but it is broadly drafted. It is entirely appropriate as the main target in some cases, but surely not in 71% of all impact investing!

Impact Currency: why Forbes needs new impact investments ratings

For impact funds, to target many areas of impact at once may be entirely reasonable. However, for individual companies and projects, maybe «less is more.» It is also telling, based on the same GIIN Annual Survey, that those impact investors who view impact as the main goal (and who are ready to compromise market returns in favor of impact), indicate fewer, not more, Global Goals than those who seek market returns.

A solution on how to use the Global Goals purposefully is simple to state, but harder to trace. At project level, instead of impact-harvesting, one «core Global Goal» should be designated to be monitored and reported above all others. That one Global Goal should meet the criteria of the Five Dimensions of Impact, the Impact Compass, «the theory of change» (which requires specifying how exactly the desired outcome will be achieved) or any other reputable sources. In fact, such a goal does not even have to be a Global Goal. Any activity devoted to solving or contributing to solving a specific social and/or environmental issue will suffice as an overarching goal. Does «social and environmental» really capture all the «good»? Surprisingly, it does. We care about our planet with everybody and everything on it.

Then let’s reserve boasting about achieving several core Global Goals to the truly «win-win» situations of real multipurpose moves. The other Global Goals should also be traced and reported, but in a more subdued way, so as to shift the focus from the quantity of the reported Global Goals to their quality. 

The Language of Kindness

During his record-setting simul, Timur Gareyev played on 48 chess boards at once, for 19 hours. Playing against him at one of his simuls, I watched with my own eyes as he spun the wheels of an exercise bike blindfolded, juggling multiple games in his head. I now ask the Grandmaster, «Timur, so how many goals can a multipurpose move pursue?» He smiles and does not see much value in such a calculation, «It is the realization of the central principles that creates harmony and facilitates success». 

Let’s not lower our standards for the Global Goals by simply marking them as done. Let’s get inspired by them and treat them with the respect they deserve.