24 Jun The Opportunity in Impact Investing: March 2014 Happy Hour with Angela Homsi, Director at Generation Investment Management
Last Tuesday Angela Homsi, Director at Generation Investment Management, joined Finance Matters for an insightful March Happy Hour. Angela spoke to the group about her drive and journey to have an effective positive impact on a range of challenges since young age, driven by her “DNA” –being Lebanese, Egyptian, Israelite, and growing up in an area stricken with conflicts and other sustainable issues. She shared the precise criteria that mattered throughout her carrier: scale, though sustainable business model, and creating in long term equilibrium. Angela’s journey started in a mainstream financial institution that failed to adequately fulfil these criteria: no scalable social or environmental impact, as a result of short-termism and an ill- structured incentive system; a model that was not fully sustainable and disrupting itself boldly enough to step away from stranded behaviours and business areas; leading to an uncertain outlook for the long term. She also worked with the non-profit sector geared to boosting purpose- driven private sector models, where she found the impact to be significant in some specific situations, but with incentives and funding model failing to achieve scale and sustainability due among other things to the lack of financial stability, innovation crowding-out and less leverageable capital.
Angela then discussed impact investing, which is characterised by the intent to have an impact, the ability to measure it, and the existence of a positive financial return. She saw impact investing as an approach with the potential to tap and further leverage a vaster amount of assets such as foundations’ balance sheets, currently mostly invested according to traditional criteria. She is strongly committed to impact investing, but she believes another area has the ability to achieve even larger scale and shape capitalism as a whole towards a more sustainable framework rather than only affect a smaller asset class, due to fiduciary duty issues which have been slow to evolve to date.
This is what sustainable investing and the work of Generation IM are about. She works on that approach, which is applied across the whole range of impacts and on a capital structure agnostic basis, with scale, sustainable investing process and the goal to internalise externalities and hence provide a long term stable framework. Taking into account ESG factors in investment decisions, and thus selecting those companies that understand and proactively manage the risk and opportunities linked to social, environmental and political challenges they are faced with, is simply rational, because it allocates capital with a more holistic understanding of risks & reward over the long term. The fiduciary duty that asset managers hold towards asset owners should consequently encompass this.
For Angela, the sweet spot maximising her three criteria is capitalism at the crossroad of impact investing (intent) and sustainable investment (process). And that can be applied across the capital structure, companies’ size, innovation level, sectors, and impact outcomes. With this inspiring talk and new perspective into investment decisions, Angela hopes that more and more people will find their right place in the investment spectrum – taking into account all of our needs, from economical, to social and in respect of wider stakeholders’ value, our generation and the next ones and the planet we live in.