How Well are you Delivering on the Impact Promised?
“Greenwashing is like putting lipstick on the pig.”
It’s great to have impact become more mainstream, but we need to differentiate between good and great.
How well are you delivering on the impact you promised in the one-pager you hand an investor at the first meeting – through to what you show you’ve done in your impact report five years later?
Willem Vosmer with Steward Redqueen shared his insights at the Global Impact Investing Network for our micro-podcast series.
Podcast Transcript
Jacob: [00:00:00] Welcome. I’m here with Willem Vosmer with Steward Redqueen. We met last year at the GIIN.
Willem: That’s right.
Jacob: And we’re here again at the Global Impact Investing Networks Investor Forum in Copenhagen. Give me just a quick intro to what you guys do.
Willem: Yeah. We are a consulting firm, a boutique consulting firm focused on impact and sustainability.
In short, we advise our clients on the impact of impact investing. How you build a strategy around it. How you keep true to the purpose that you’ve developed for it. How do you measure your results on it? How you build a story around it. How you can agree on goals, targets, and achievements with your investors or the data you want to report on with your investees.
In short, we often want to be the grease in the wheels of the whole financial ecosystem when it comes to impact investing.
Jacob: Give me an example or two of like what that looks like.
Willem: Right, [00:01:00] so you could think of an investor, let’s say a development finance institution who’s looking to invest their capital in emerging markets and they want to do that with impact. Now well, What is Impact? You can make a positive contribution to these economies from climate to particular sectors in these economies to particular groups in these economies.
So we help them put together a strategy around a purpose that drives them, that is close to their political agenda or their economic agenda. And that’s where you can end up developing a general end strategy for them. That’s one example of the investors looking to allocate their funding to asset managers, but in a way that’s clear and very focused on the purpose they have for their capital.
Now, one step down, there is the asset manager or the GP [00:02:00] that needs to raise funds from such investors, again, let’s say from a DFI, those asset managers also need to find their purpose, their mandate, and they have to link that to the mandates or to the impact strategies of these investors. And to do that, you need to adjust your language. You need to adjust your terminology. You need to talk the same language when it comes to impact. Because sometimes you can have an investor allocating their funds to your allocating their capital to your fund because they like the climate effect of it.
And others may jump in, jump on board because they like the economic effect on it, how you create jobs. Well, creating a job is a very different impact than saving nature or saving the planet. So this is where we work with different players in the value chain [00:03:00] again, of that impact financial sector.
Jacob: Why don’t organizations just do this themselves?
Willem: If we again, look at the asset managers. You very often see that they’re, they’re so deep into their solution and the structure and the purpose that they have, that they often need an outside perspective to make it simple again because impact investing is not that hard, or better said the strategy shouldn’t be that hard. You should be able to explain it in one sentence, but you only succeed in doing that if you’re very clear about your purpose, about your ambitions, about your goals, and your, let’s say the pathways through which you want to achieve those goals.
And we see that a lot of our clients just have trouble rising to that meter level where you can not only explain it in three hours but also in 30 minutes, 30 seconds. And that’s where we help. What is your story in 30 seconds? [00:04:00] What is your narrative in three minutes? And what is your methodology explanation in three hours? These are different audiences that serve or that need, that have different needs for what they want to hear.
Jacob: It’s not just after the fact, how do we make a fancy PDF?
Willem: Yes, that’s right. So let’s say between the brochure that you hand out while fundraising. And the report that you produce five years after investing. There’s a whole lot of work in between and that should be all connected. So your impact brochure that you put on the table while fundraising should not overpromise on what you’re going to deliver in the future.
It should be not just a fancy one-pager. No, it should actually be a very thorough elaboration of what you’re going to do, promise, and deliver when [00:05:00] investing and when managing your portfolio. And then once you have a few investments in place and when you have a portfolio, what are then the indicators that you need to collect data on and what are the insights that you then want to produce to your investors to show that you’re making a difference that you actually deliver on the purpose or the impact that you promised to make?
So that’s where we develop the methodologies and also the tools to produce that and to deliver on those promises and to ultimately provide the data and insights that are needed for good impact reporting.
Jacob: So how do organizations know that they need your help?
Willem: A few years ago, the trigger would be the second or third investor meeting when the fund was two years old.
And the investors are getting anxious and nervous about, Hey, but weren’t you promising me impact data, impact insights, impact [00:06:00] results. That’s what I read in your brochure. That is a trigger to call us because then the impact investor or sort of fund manager often realizes, Oh, shoot, I promised something that I have to deliver on, so I need, and it’s actually hard.
I need indicators. I need methods. I need tools. I need templates. I need to explain this to my investor investment managers. I need to explain this to my investees that they have to provide me with data. And then they’re actually too late. So now I hope and we see that more and more, so the trigger is when your LPs or when your potential LPs are starting to ask questions.
Sure. I’d love to invest in your fund, but that means that I want an annual insight into the following results, or I would like to agree on incentives, and I even sometimes they even want to agree on a carried interest based on impact. Well, what are they, how can you put that together? [00:07:00] The technical details of it, of linking financial performance and financial incentives to impact performance.
So there’s ideally we’re involved as soon as possible in the process and we’re getting involved sooner and sooner every day. So that’s a good, I think that’s a good sign of the market also maturing, right? Everyone seeks legal assistance right away. So why wouldn’t you seek impact assistance right away as well?
Jacob: Like who are some of the players that you work with?
Willem: We work with a lot of DFIs in Europe, but also the multilateral, AFDP, IFC, and we’ve helped them on their end, put together strategies and requirements for the fund managers. For the fund managers, there’s also plenty we’ve worked with. So it’s in the more commercial market where we work with finance emotion, but also symbiotics also blue earth capital.
Also in the venture capital space, we in Singapore, we have, an office in Singapore where we work with a lot of venture capital [00:08:00] firms. Where we also work in the access to basic needs space. So TVM Capital, TVM Healthcare Capital is one of our clients that we work with in Asia.
They’re currently raising funds for their access to health funds. And then there are a few funds that we work with on their impact data management and reporting. And that’s where you could, for example, AfricInvest is also here we’ve helped them put together their impact report last year.
Jacob: What is the biggest hurdle that you’re facing right now?
Willem: I want to have the market know that we’ve been in this business for 20 years already. We didn’t just step in or jump on the bandwagon because there’s a lot of clout. No, we’ve been doing this for 20 years already and we bring a lot of experience, but that’s not the easiest story to tell in a market that’s so busy right now, that’s, there’s lots of waves. And we just have to stay true to our cause and to do the work we do.
Jacob: Why would they choose Stewart Redqueen over other providers?
Willem: We want to be the grease in the wheels of this whole [00:09:00] financial system. And that makes us a very good partner for the investors developing realistic and also meaningful requirements for their asset managers. But for the asset managers, we know what their investors ask from them.
So we know what the questions are that they can face when raising capital from the asset owners. And we also know because we’ve worked with the area where their investees portfolios. We also know what realistic requirements or realistic data points are to ask from your investees. So in that whole value chain, I think the knowledge that we bring to all players that makes us a knowledgeable partner in advising every partner on how to work with the different angles of the market.
Jacob: As there’s more entrance in the space, proliferation of greenwashing, how do you help prevent that?
Willem: That’s a very good question. I think that is the crucial [00:10:00] question for everyone here. Now, we now know what the rules are to do good impact investing, but we also see that there are earlier adopters that are industry leaders who are now in the buckets with some others who just came on the bandwagon, who put lipstick on the pig and now say, Hey, listen, I got my impact fund too. I think this is, there cannot be a mainstream investor with an impact fund labeled the same as this single-focused, fully impact dedicated fund manager whose been doing this for 20 years already. That’s where I think we are going to see in a market a differentiation between good and great.
And great to me is defined as an impact investor who is transparent about not only what they achieve, but [00:11:00] also what they don’t achieve. What they know, but also what they don’t know. There was, there’s one impact investor who did a great job a few years ago with their impact report that started. The numbers presented in this report are probably wrong. But they’re a great starting point for us to inform ourselves or investors and to make decisions to do better every day.
And that to me is in marketing and that is true, good marketing for impact investors. And I think that’s what differentiates it from mainstream marketing. So that’s one thing it’s that transparency. Second is the authenticity. What do you do as an investor that is truly close to your intrinsic motivation?
What do you do? Not because regulation asks you to, not because standards prescribe you to, not because the beer benchmark tells you to. But what do you do because you are intrinsically motivated to do so? And then your story or your strategy is also much easier to [00:12:00] tell because it’s your story instead of the story that meets consumer demands or investor demands.
So that’s where the pig should look different and not just because of the lipstick.
J
acob: If someone wanted to find your organization online, what’s the best way for them to track you down or to learn more?
Willem: It’s www.stewardredqueen.com. The best way to remember our name, Steward Redqueen, is because it’s a combination of stewardship, we all have to take care of our planet, and the Red Queen principle, that comes out of the story of Alice in Wonderland, where Alice walks in the world of the Red Queen, and the Red Queen says, ‘In my world, you have to walk twice as fast to get ahead.’
And that’s that combination that we see. There’s sustainability is an obligation now, but in a world that’s getting all the more competitive by the day.
Jacob: Thank you so [00:13:00] much, Willem, for sharing your story and the good that you’re doing, and keep up the good work.
Willem: Thank you, Jacob. It was a great pleasure.
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