The way that people invest is starting to change and adapt. An enlightened subset of the population is starting to invest much more in line with their own personal values rather than investing in anything. This includes non-traditional investing such as lending a local farmer money, or supporting emerging people and ideas, according to Amy Domini writing for the Huffington Post in 2013. However, as Domini points out, investing based on values is not necessarily a new idea. For example, in the early 1980s, some Americans were not investing in South Africa due to the issues of Apartheid that existed there. Also, Domini explains that even earlier, John Wesley argued that making money had to be mindful, such as not investing in drink if it is wrong to drink. Domini explains that Nia Global Solutions is a company that invests in technologies and products that solve difficult issues and that do this as a core function of their business. This was an offshoot of Domini’s own company, and she explains that achieving this was very challenging. They were trying to find companies that were working on solving a difficult problem that had a female on the board, or at least in top management. Of 2,700 companies this number was reduced to three. Finally after additional effort, a further 40 companies were identified, but this shows just how hard it is to invest with purpose based on personal values.
McKinsey also has a thing or two to say about investing with purpose. It profiled LeapFrog Investments, an organisation that was founded by Dr. Andrew Kuper in 2007, which offers insurance and financial services to 18 million people in Africa and Asia. The goal was to be able to offer financial products to very low income consumers – those that maybe earn only just over $1 a day. LeapFrog has accomplished some amazing achievements. As explained by McKinsey:
“LeapFrog helped expand the customer base of Ghana’s Express Life Insurance from 12,00 people to 350,000 in less than two years”.
It has, according to McKinsey, also invested in Bima – a mobile insurance platform that has many customers in low income nations like Bangladesh, Senegal and Indonesia. Interviewing the founder of LeapFrog, McKinsey explains that low income individuals were often seen as people that were not potential customers for financial services. However, this is not the case, and many of them are working people who carry out a lot of different financial transactions at any one time. The impact of LeapFrog has been to offer services to these people where none, or a lack of variety and access existed before. From this, Andrew Kuper explained to McKinsey that it is his belief that investing in profit with purpose will be the next venture capital. He also dispels a misnomer that some have regarding this issue, namely that the situation of investing with purpose:
“Is not a trade-off between money and meaning – it’s a synergy”.
Kuper explains that companies that focus on these areas have a better chance of attracting talent and avoiding corruption. Focusing on these sorts of untapped markets is likely to have benefits for decades and decades.
Leapfrog achieves all of this by investing in companies in Africa and Asia that are considered to be high growth, with the aim of serving two billion emerging consumers, and offering capital for companies to be able to grow and scale. Currently the company’s portfolio companies reach 18 million people. Tools offered include “empowering financial tools such as insurance, savings and investment products to emerging consumers”. On the other side of the coin, LeapFrog has been able to, and focuses on offering its investors a “top tier” rate of return. This is excellent because it has the impact of demonstrating that organisations that put purpose first can offer significant competitive advantage in the market place. Indeed, in 2012 the company reported that its markets saw 17.4% financial services growth, showing the high potential in this market. LeapFrog argues that it is the leader in the field of profit with purpose, focusing on maximising financial and social returns by building up companies in emerging markets. It is supported by major world institutions such as J.P. Morgan, Prudential, Swiss Re and TIAA-CREF.
Maria Fonseca is the Editor and Infographic Artist for IntelligentHQ. She is also a thought leader writing about social innovation, sharing economy, social business, and the commons. Aside her work for IntelligentHQ, Maria Fonseca is a visual artist and filmmaker that has exhibited widely in international events such as Manifesta 5, Sao Paulo Biennial, Photo Espana, Moderna Museet in Stockholm, Joshibi University and many others. She concluded her PhD on essayistic filmmaking , taken at University of Westminster in London and is preparing her post doc that will explore the links between creativity and the sharing economy.