My reflections

Unlike many members of the Indian upper middle class, I never got used to the sight of homeless people on the streets of Calcutta and often pondered why I was afforded extravagance while many struggled for the necessities. Unfortunately, the world we live in is controlled by the powerful and rich who will stand in the way of anything that threatens this hierarchy. In such an unjust world, impact investing seems like the light at the end of the tunnel. I came to SIPA hoping to find that light, wanting to learn how to structure business in a way that brings about social change.

As I explored impact investing in the first semester, I learnt how nuanced it was. It is much more demanding than regular investing because you not only need to deliver financial returns but also measure and deliver social returns. I decided that this was a challenge that I wanted to take up. I envisioned that this course would provide me with real-world experience in this field and lo and behold, it did. While our client does not identify as an impact investor, they express a desire to assess and delineate the tangible effects of their portfolio. They specifically aim to gauge the actual positive social benefits generated by businesses, distinct from traditional ESG considerations, a realization that became apparent to us at a later stage. My team and I thought long and hard about how we could picture and show impact. We have a team member who has worked on ESG reporting and she gave us a lot of information on the various regulations, details on reporting standards, and the best practices. Her valuable insights helped us get started on the project.  

In the beginning, we faced some ambiguity in understanding what the client expected out of the project and did not have a clear sense of how the deliverables would look. To tackle this, we immediately met with our faculty advisor to seek her expertise and to design a plan of action. With a brief sense of understanding of the client’s expectations, we delivered our first pitch to them. However, the client made it clear that our direction of thought and our understanding of the project was flawed. Even though it felt like we had stumbled on a huge hurdle, the situation taught us how to face negative reactions and emotions. We took a second to rearrange our thoughts and decided to use our time with the client to understand the project goals better. We asked many questions, especially obvious ones and reiterated everything to understand in simple words what they needed help with. We not only understood what the client needed but also learnt that the client was personally passionate about sustainability practices. This made our project goals much clearer and understanding the client’s motivation drove us to passionately fulfill the requirements. 

We regrouped again and came up with a very comprehensive and detailed roadmap. I was extremely impressed that day with my team's capabilities. I understood what collaboration and teamwork could lead to. Each one of us had a piece of the puzzle and we combined it to form the most detailed strategy of delivering our work. 

We recognized that in impact investing we can measure impact because there is intentionality. A business aims to solve a social or environmental issue which creates impact. Measuring impact here is very simple since it is fundamentally embedded in the business plan. In the case of our client, the businesses are regular investments and not impact investments. Thus, the challenges lie in identifying and measuring impact. We identified two main tasks 1) Defining what data is to be collected i.e. what are the numbers needed to show impact and 2) Understanding how to transform that data i.e. how to show that there has been a change, what is the story behind the impact. 

To do this, our team identified avenues such as IRIS and other impact investing strategies to come up with metrics that can solve for quantitative impact. We decided to look at sector-specific information on impact measurement through sector-specific funds. Another strategy we thought of was to create a counterfactual in cases where the impact was not very evident. 

In the following meeting, my colleague took the lead and delivered the plan which impressed the client and satisfied her needs. Even though we haven't worked together for a long duration, there are some things I have learnt that I can do to make this a fruitful experience for all of us. I learnt that it was important to assume positive intentions and be kind and empathetic. Negative emotions make an already difficult task way more difficult. Communication is key to ensure that everyone is on the same page and is feeling heard. Each team member has a strength and skill that can be leveraged. I am extremely excited to develop this further and see how we deal with these challenges. All while learning more about the practical applications of impact investing.