5 Reasons to be Bullish on the Post-Election Impact Economy

shutterstock_433164853The presidential election on November 8, 2016 sent shockwaves through socially and environmentally responsible business communities in the United States and around the world. As folks begin to recover, it’s critical to think clearly about what steps we can take to foster new momentum, creativity, and courage as we move forward. Here is what is keeping our MoFo Impact Team bullish on the impact economy:

  1. The impact economy is driven by people, private sectors, and states. First, we should recognize the critical role of entrepreneurs, companies, and investors in the creating the impact economy. This is not a government-driven endeavor. Social entrepreneurialism and impact investing are borne of a desire to use the private market to improve the lives of peoples and the health of the planet. In fact, a key driver for the “founders” of the modern impact economy was a frustration with government failures in the 2000s; for example, the passage of the first social purpose and benefit corporation statutes and early restructuring of some bellwether impact investors occurred during this period. These days, impact investing is maturing quickly of its own accord, and both small and large investors – including foundations, VCs, private equity funds, and hybrid investment vehicles – will continue to push the space in new directions. Certainly federal help would be welcome, and there are reports that hundreds of companies, including the world’s most recognizable brands, are pushing the new administration to support low carbon policies. But the private sector will continue to innovate regardless of federal policy as a result of market demands. States and even cities will also continue to play a role. More than 30 states now have some form of social enterprise corporate entity, with new states currently considering legislation, and cities like New York and San Francisco continuing to experiment with social impact bonds. Meanwhile, social entrepreneurs and inventors are working overtime to create innovative solutions to some of the world’s most pressing problems, despite (or perhaps because of) the new administration.
  1. People care more than ever about creating meaningful change. The need to create large-scale social and environmental solutions to our problems is greater than ever before. We are at a tipping point on too many issues, climate change perhaps chief among them. With the new administration poised to claw back social services and environmental regulations, millions of people have spent the weeks after the election volunteering their time and money in support of needed private and non-profit entities working for a better world. For instance, donations have spiked for some civil liberties organizations and environmental groups, and social media is awash in pledges by social entrepreneurs to double down on their efforts. The impact economy has an opportunity to take an even greater leadership role in the mainstream economy by demonstrating that “doing good” is also good business. And responsible companies can show that inclusion, disclosure, empathy, and respect make for more robust markets, higher returns, and stronger brand commitment and consumer loyalty. In short, the impact economy has the ability to reach millions of new people who are frustrated and offended by the state of our world and looking for alternatives, including many of the people who voted Trump into office.
  1. Sustainability and diversity are simply good business. There is a growing recognition that sustainability is good for our pocketbooks as well as for the planet. One new report by the Business & Sustainable Development Commission (Valuing the SDG Prize in Food and Agriculture) projects that creating sustainable solutions to the challenges of the food and agriculture sectors could unlock “major business opportunities worth US$2.3 trillion annually by 2030.” Meanwhile, consulting groups like McKinsey understand that companies that have more diverse workforces financially outperform their competitors. In today’s hypercompetitive marketplace, companies will continue take actions that are in their financial best interest. And many investors believe that solutions to the world’s largest problems will yield the highest returns.
  1. The rest of the world is still pushing ahead and pioneering ideas. While it is sometimes easy to forget about the rest of the world during election season, we can draw important and powerful lessons from the innovations taking place abroad. In Europe, cities and states are implementing strong social impact bond programs in addition to EU directives which are requiring greater disclosures about social and environmental impacts. In Africa, health care systems are becoming more flexible and accessible to the people who are most in need of treatment. In Asia, social enterprises are using mobile technology to allow people to manage their money remotely, creating savings for families. In Latin America, impact investors are testing new ways of measuring impact and honing in on meaningful metrics. The impact economy is global, and foreign governments and citizens are implementing exciting new ideas in every corner of the world. Some of these ideas will succeed and others will not, but we should assist where possible, learn from their mistakes, and import good ideas back home to our communities in need and to protect the natural environment which impacts all people.
  1. Quitting is not an option. Simply stated, the issues that impact our world today are too important to give up on. Climate change, civil rights, media, poverty, health care, education, peace – these are problems that will seriously affect the lives of baby boomers and millennials alike – we simply cannot wait for another generation to implement solutions. These are our people. And this is our planet. We need to push the private sector to continue to innovate and deploy capital now more than ever. To take just one issue as an example: climate change.  The new administration may be unwilling to take regulatory action or to commit to international treaties to reduce emissions. But while the debate drags on inside the Beltway and on mainstream media, the planet keeps warming, sea levels keep rising, deserts keep expanding, droughts keep lengthening, etc. As Ceres President, Mindy Lubber, recently wrote, “Today’s reality is that the transition to the low-carbon economy is irreversible, inevitable and fully underway. There’s no turning back. The business case for climate action and sustainability is stronger than ever, and the climate science is incontrovertible.” We do not have the luxury of waiting to address these problems. The time to act is now.