Impact Investing: Transforming Capitalism for a Better Future
In recent years, the concept of impact investing has gained significant traction worldwide. It represents a paradigm shift in the way investors approach their financial decisions by considering not only financial returns but also the positive social and environmental impact of their investments. Our event “Social Impact through Investment: Values and Strategies” hosted at Venture Cafe, CIC Tokyo on May 18th, Thursday Gathering, shared the perspectives of our honorable investors on impact investing, its emphasis, and its growing importance in today's world.
Eriko Suzuki, an experienced investor who leads KIND Capital, highlighted that impact investing has been flourishing in Japan for over 20 years. She mentioned the different angles of impact investing, such as direct investments with companies like Softbank, which often require patience due to their long-term nature. Suzuki emphasized that impact investing extends beyond traditional financial factors and incorporates ESG (Environmental, Social, and Governance) risk analysis, focusing on environmental impact and stakeholder well-being.
John Kojiro Moriwaka (or he prefers to be called 'Crazy John's), the Founder and CEO of Silicon Valley ventures, shared his belief that a good investment goes beyond solely making money. He emphasized the diverse scope of impact investments, which can span various industries and technologies. John specifically mentions 12 different technologies, including biotechnology, artificial intelligence, and quantum computing, which address social issues.
Priya Sultan, our Founder, emphasized the significance of investing in companies that align with ethical and sustainable practices. She noted that impact investing goes beyond mere profit-seeking and recognizes the limitations of NGOs in eradicating societal issues due to their lack of financial sustainability.
And Masahiro Hata, the Founding Partner at GLIN Impact Capital, emphasized the need for a blend between the private and public sectors, as the public sector alone may struggle to solve complex problems. Impact investing, he suggested, represents a new standard of capitalism that bridges the gap and promotes positive change. Though impact investing can be regarded as a recently established field, there are several related frameworks that both entrepreneurs and investors utilize. To add to the discussion, John suggested integrating frameworks into the investment process, mentioning R3 Innovation and the MGA frameworks. These tools enable investors to make informed decisions by deepening their knowledge of specific technologies and aligning them with the United Nations' Sustainable Development Goals (SDGs). Hata stresses the importance of careful planning and evaluating the alignment between a company's intended impact and its business activities.
Diving into more in-depth questions about the challenges in impact investing, Priya addressed the challenges of impact recording and the risks associated with investments not generating the intended impact or deviating from their original course. Eriko added that the lack of standardization poses a significant challenge, and investors need to hire experts to navigate this evolving landscape effectively. Furthermore, there needs to be a positive influence of successful impact investing case studies in Japan and mentions government initiatives supporting the sector. Not only want the scope to be focused on Japan, but the panelists also pointed out the need for Japanese venture capitalists to invest and collaborate globally, further promoting impact investing in the country. It is very essential to visualize impact, integrate it into the market, and hold each other accountable.
Overall, the session was a great success with more than 70 enthusiastic audiences joining us at the stage, amongst more than 400 others who participated in person during this Thursday's Gathering. We were extremely grateful for the insights and advice that our panelists provided to the session, as well as the cooperative facilitation given by the team at Venture Cafe, CIC Tokyo. Impact investing is revolutionizing the investment landscape by incorporating social and environmental considerations alongside financial returns. It offers a promising path to address societal challenges and create a more sustainable and equitable future. As the movement gains momentum globally, we look forward to contributing our effort to support individuals, investors, corporations, and governments to work together to accelerate its growth and maximize the positive potential of impact investing for a better world.
Photo credit: Venture Cafe, CIC Tokyo, Social Impact Lab Japan