Colin Melvin, Chair, Social Stock Exchange
Please give us a bit of background on yourself, and how your organization plays a leadership role in the impact investing space.
I am a thought leader and agent for positive change in the investment industry. I have been at the forefront of global developments in corporate leadership, stewardship and sustainability and responsible investment for over twenty years and have international experience from the investor and corporate perspectives in challenging strategy, promoting effective risk management and corporate governance and developing well-aligned incentives. I also have a strong network of contacts at the most senior levels within the world's largest investment institutions and listed companies and expertise in building trust and adding value to boards in industries with particular stakeholder challenges having worked with companies to improve their relationships and performance. Amongst many initiatives, I was a co-founder and first Chair of the UN Principles for Responsible Investment.
The Social Stock Exchange, for which I am currently Chair, is the home of positive impact. It provides access to the world’s first regulated exchange dedicated to businesses and investors seeking to achieve a positive social and environmental impact through their activities. To be listed on SSX, a company must pass its stringent validation process. These companies can be big or small, so long as they have the potential to deliver viable returns and can demonstrate how they will adhere to their own social and/or environmental mandates and missions. Investors can be confident that their money is being invested in credible, social or environmental companies. And business owners can rest assured that their investments are in excellent company.
How well are companies adapting to the mainstreaming of purpose-driven finance? What ways is impact investing making headway, and where is it lagging?
Purpose-driven finance is best seen as a dialogue between the providers and users of capital, which leads to decisions and developments of mutual benefit. It is a way of expressing the broader and longer-term interests of investors, in a way which leads to an alignment of interests with the companies in which they invest, whether this be through actual engagement or dialogue with the board or market signals through investment decision-making. Corporate boards are adapting to its mainstreaming very well. Indeed many have welcomed this as a major improvement on the dismal short-term discussions with Wall Street and the City to which they had become accustomed.
Impact investment is making headway in many areas, including the definitions and measurement of impact. The next stage of its development will be a recognition of the interdependence of companies and their investors and a resulting need to understand and quantify wealth creation in a broader sense than short-term monetary gain.
What challenges do you see for the future of purpose-driven finance?
Purpose-driven finance will need to achieve better articulation of purpose in the context of long-term business success. That is to adopt a pragmatic approach based on genuine dialogue between the providers and users of capital.
What will you be discussing at The Economist's Impact Investing event in New York on February 15?
As an investment industry, we know that we are investing in ways which damage society, economy and environment, but seem unable to stop. We are consistently encouraging the sale of the long term for the short term, allowing (supporting) externalisation of costs. With a practical and pragmatic orientation, I will consider purpose-driven finance and impact investment as indication a possible way forward.
To learn more about the Impact Investing event, click here.