The World Is Demanding Rigor, And We’re On The Path To Get Them There!

My grandfather passed away a year ago. He was a businessman, entrepreneurial – deeply kind. As I have worked on this project throughout the semester, I have found myself turning to him, asking how he would feel about this shift, our task of repurposing finance for social impact. He was born in the late 1930s – but believed adaptability was the only way to evolve as a collective. He would spend hours teaching himself Microsoft, and how to use the latest technologies, asking all nine of his grandkids to teach him something new. When he passed, I was working in ESG, and although it defied his entire notion of business, I remember him being receptive, intrigued, and even excited. He believed each generation was evolving in ways the previous might have fallen short.

I believe the question we have been grappling with throughout this semester is one best defined as shaping identity amid transition. My team and I grappled with pushing our client to adopt stringent measures that go beyond financial returns without losing the attention of hard-lined portfolio managers. There was no easy way to do this – introducing something new while preserving a rooted sense of identity– how do we get all hands on deck, excited to do the right thing despite the inherent fear of change? 

In our case, we wanted our client to not only measure existing impact but to aspire for strategic goals that will pipeline incoming capital towards impact-driven assets to support development in historically underserved communities. Initially, our client was not sure what they wanted to achieve and had zero internal backing aside from one senior manager to do this. What is it to finance if healthcare expands access? Is a thought I imagine portfolio managers having had. So, we did what any Columbia student might do – we began conducting research and building our case. By diving deep, demonstrating the ‘case’ for impact, its financial benefits as a risk mitigant, and tailoring our research per sector, I brought the curious spirit of my grandfather forward, hoping to capture the imagination of traditionalists showcasing adaptability as the only way forward. This strategy was effective. By coupling the notion of impact to their fiduciary role, we gained credibility and began exploring one-on-one conversations with the portfolio companies to integrate our research into a measurable, data-driven tool. 

While at first, we thought we were going to have to do a lot of convincing, it turned out that many companies are already attuned to this shift in institutional levers – they are ready to incorporate and report on their impact – they just need management and support. Our conversation with a healthcare company reflected this attitude, and it assured us that we needed to push for rigor and more robust metrics. The red carpet was laid out in front of us—we had the perfect opportunity to create a unique tool from the ground up, with the collective enthusiasm of industry leaders seeing its need and the newfound support of internal portfolio managers.

The synergy of my team made this entire process not only fun but extremely dynamic. One of my team members is organized and well-versed in Excel, and this helped us when creating a coherent and organized system. We were able to swiftly select two strategic goals per sector, and then streamline and design metrics, using the IRIS+ framework. Our ‘Impact Stack’ is to be used to support both portfolio managers in their assessment processes, and for companies strategically deciding where they have an impact, what is contextually relevant to them, and perhaps how to then incorporate this new framework into their external communications. It was invigorating to feel like I was part of a movement, redefining finance and creating a new lens by which both the upstream and downstream are interacting with capital. Not only that, but as I reflect, this process dually is unlocking more mission-driven roles within finance – portfolio managers are now not only there to support the accumulation of wealth but can also oversee impact. How great is that! 

After speaking with some colleagues from the IFC, I saw how increasingly, teams are being created within DILs looking at the effect of capital on livelihoods and human development, shifting away from ESG to more granular considerations of development that take local contexts into account. I, like my grandfather, need to practice the same adaptability, staying on my toes and questioning each movement as needed. Flexibility is the key to a better and more rigorous model that will enhance equity and improve well-being for all. Today, I am confident our clients are empowered to lead in regional transformation; providing access to communities who have never had access to healthcare services, inputs for farmers who risk facing unstable currency exchange rates, and job opportunities in the green transition through increased investment in renewable infrastructure.