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Impact Investing:
Can It Save Capitalism?

In 1970, economist Milton Friedman argued that “A company has no social responsibility to the public or society. Its only responsibility is to its shareholders.” In several ways, this mantra of “greed is good” has guided capitalism for 50 years, but the emphasis on pure profit has not necessarily been working for the vast majority of Americans.

Recently, the doctrine of “shareholder primacy” has come under heavy fire. Consumers proactively choose brands aligned with making the world a better place. Two-thirds of millennials are making career and purchase decisions based on companies’ ethical standards. Investors are increasingly supporting the concept of “stakeholder capitalism,” which requires the consideration of the potential impact on people and the planet, in addition to profit. According to the Global Impact Investing Network (GIIN), there is nearly $1 trillion in impact assets under management, not including “sustainable investing” and Environmental, Social, and Governance (ESG) funds. Further, to protect mission-driven companies from corporate raiders, the B Corp movement has created the “benefit corporation” as a statutory alternative.

However, there has been significant pushback, with special interests promoting regressive legislation to undermine impact investing. While some corporations are making changes consistent with the Business Roundtable’s recent promotion of stakeholder values, others resort to virtue signaling with various forms of “impact washing.”

Despite the challenges, many now believe that the shift from greed to good may be approaching a tipping point, resulting in a new, more sustainable form of capitalism.

In our upcoming VLAB panel discussion, thought leaders and investors will discuss the most salient elements of impact investing and benefit corporations.

• How does impact investing differ from socially responsible investing (SRI) and ESG funds?
• Can metrics that quantify impact help investors achieve both social good and profitability?
• How can entrepreneurs attract impact funding? And is there a downside?

Join us on June 29 to find out.

Moderator

Panelists