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Los negocios con propósito marcan la diferencia. Descubre cómo los líderes mexicanos pueden combinar rentabilidad e impacto social para lograr un futuro sostenible.
Conferencista:
Nicholas Andreou - Head de IA en Better Society Capital
Conferencista:
Nicholas Andreou - Head de IA en Better Society Capital
Categoría
📚
AprendizajeTranscripción
00:00Hello everyone and thank you for joining us at the MIT SMR Mexico 2025 Forum and in particular
00:14for joining this session. My name is Nick Andreo, I've been working in impact and impact investing
00:19for over 15 years and today I wanted to share some thoughts on social impact and purpose-driven
00:25businesses and some lessons for Mexico. And I think it's always worth just setting the scene and
00:31zooming out and thinking about the broader context before we get into the details. So let's start
00:36there. Capitalism has done a lot of good for our world and societies as you can see here in this
00:43graph of GDP. So when capitalism is invented and we have the industrial revolution those graphs really
00:49shoot straight up. But at the same time it's created a lot of problems and this is across multiple
00:55industries. So social media for example and the effects that it's having on people's mental health,
01:00democratic process and so on. But also energy companies, fossil fuels in particular and the
01:06effect that's having on the quality of our air and the environment in general. But also financial
01:11institutions with the 2008 financial crisis and other issues that have come as a consequence of
01:17that crisis. And most recently we have the AI companies where it's unclear exactly what the negative
01:25and unintended consequences might be of this but we are beginning to understand that there are
01:30several from effects on our cognitive capabilities but also in the way that these companies operate in
01:36terms of their environmental footprint, water consumption and so on and so forth. So things aren't
01:43looking hugely positive. This is the sustainable development goals created by the United Nations to go from
01:51from 2015 to 2030. This involved a consultation of over a million people around the world and it was really
01:57trying to answer the question of what would a ideal world in 2030 look like. And you can see there from SDG 1,
02:05no poverty, all the way through to SDG 17, partnership for the goals, a range of things that we care about.
02:11So number three is around health, number 13 is around protecting the planet and so on. Now the UN has indicators to check
02:19progress on how we're doing against these goals which they report on annually. And this is the latest update.
02:26So green is on track or ahead of track and everything else is kind of lagging behind that. So across all of
02:33the goals you can see that there's still a lot of progress that we need to make. And again this was from
02:382015 to 2030 and we're kind of getting close to that 2030 endpoint. So ideally we'd be seeing a lot more green
02:46on this graph. Now when we dive into some of that specific to Mexico you can see similar trends. So
02:52this is a graph of looking at the percentage of people that are living with obesity adults in Mexico
02:58between 1992 and 2023 and you can see that the graph is straight up and that percentage has almost
03:05doubled in that period which isn't good for things like diabetes, hypertension and so on. This is another one
03:13that I found particularly alarming. So this is the suicide rate and you can see there over time and
03:19that peak at the end which is for 2024 is 9,000 deaths registered through suicide. So this suggests
03:25that in the mental health space there's a worsening of conditions when it comes to Mexico as well.
03:32So again connecting that context of capitalism and business and some of these negative effects,
03:37the key question is what type of businesses do we want to nurture and grow? Milton Friedman is a very
03:43famous US economist and he said the social responsibility of business is to increase its
03:48profits. If you do that you add value to the society, you employ more people, you pay more taxes and so on.
03:55But it's clear from some of the stuff that we've just talked about that this isn't the full story.
04:00So this is another quote that I quite like. Growth for growth's sake is the ideology of cancer.
04:06So if the only purpose here is just to grow, which is what capitalism sort of suggests,
04:11then we are going to have this kind of systemic problem in the system. So again it's that question
04:17of what types of businesses do we want to nurture and grow? And this is where impact comes in. And I
04:23should just clarify here when I'm saying impact, I mean sort of mainly social impact but also the
04:29broadest possible definition of that social impact. So a lot of people talk about climate, agriculture and so
04:34on. Those things obviously feed into social impact. So I'm kind of using a very very broad term here.
04:41And the idea is this is changing the lens with which we view the world, the business in particular,
04:47and it's around growth for prosperity's sake rather than just growth's sake. But let's get a bit more
04:53precise. And the challenge here is that there are several definitions and it's not really that clear what
04:59we mean when we say social impact or impact and so on. And despite that many people claim that they
05:05have impact, which can make it sort of particularly confusing. This is an example from the world's
05:10largest asset manager, Blackbrook. A few years ago they had to rename one of their impact funds to an ESG
05:16fund, which is Environment, Social and Governance fund, because it was considered actually less
05:22less impactful than maybe they had originally thought. And so a group of stakeholders have come
05:27together under the banner of the impact frontiers, an organisation, and they have defined impact in
05:32this way. And this is the closest that we have to a consensus. So impact is a change in an outcome
05:39caused by an organisation. An impact can be positive or negative, intended or unintended. An outcome is the
05:46level of wellbeing experienced by an individual or group of people, or the condition of the natural
05:52environment. So a few key things to pull out there. So one, we're talking about changes in outcomes,
05:58and that connects back to those sustainable development goals. So some people say, oh, we're a
06:02very impactful business because we work in healthcare, or we work in, you know, marginalised
06:08communities or whatever it is. And it's like, yeah, but you could be doing that and creating no impact or
06:13creating harm. So you have to be able to explain what the changing outcome that you create is,
06:18in order to sort of classify as having impact. The other bit there is that we obviously hope that
06:26we are having positive impacts in the world. But it's very clear that many businesses can have negative
06:31impacts as well. And so we need to be thinking of those and mindful of those as we go on this journey.
06:37Intended and unintended is the same sort of concept, we often very much focus on intended outcomes,
06:42but sometimes unintended things happen, and they can be potentially more dangerous, because we're
06:47not paying attention to what is happening. And just to be super clear, when they say outcome,
06:53they mean well being or planetary health. Now, the other key thing to understand here is that impact
07:00is a spectrum. You know, so some people say that when you say impact, that means charity, social enterprise,
07:07NGO, and from a financing perspective, that's only sort of philanthropy. But that's really one
07:13part of the spectrum. And it goes all the way to the other end of business and mainstream investors,
07:17with everything in between being the universe of where impact organizations and impact investing sits.
07:24Now, there's lots written and understood about the part on the left. And so I want to talk about this
07:30part here on the right, which is where we're going to focus today. So we're talking about either market
07:35rate returns, top performing businesses, or slightly below that. And the reason why this is important
07:41is because to achieve those SDGs, the sustainable development goals, the UN has suggested that we
07:48need $4.2 trillion annually of additional investment in order to meet those goals. This is an estimate by
07:55BCG focusing just on net zero. And this is a whopping $3.6 trillion to be able to meet those targets.
08:02And so it's clear here that, you know, philanthropy and financial structures that are kind of on the
08:06fringes aren't really going to move the needle to the degree of which we need it to move. And so we
08:12need private capital, private business to come in and to start solving those problems, which is why we're
08:17looking at that sweet spot of you can have top tier market returns and growth as a business, but also have
08:23very positive social impact. So I just wanted to make that point a little bit deeper. These are some
08:29examples for sort of globally, but I also have some on the next slide, specifically about Mexico.
08:35So there was this WF report that showed that nature is a $10 trillion opportunity, if you can find the
08:41right business models in there. It's around the gender health gap. And so closing that is worth roughly
08:47a trillion dollar opportunity. In digital health, it's a similar story. So a lot happening in artificial
08:52intelligence and digital digitalization of healthcare. That's another half a trillion opportunity.
08:58And it's not just about kind of investment and opportunities, but also regulators are raising
09:03the bar and incentivizing people to go in and solve these kind of problems, because we can't just have
09:08these externalities everywhere in the world. In fact, there was one study published in the Harvard
09:14Business Review that looked at, I think it was around 2021, the top 500 companies in the US based on
09:20their EBITDA. And if you factored in the known and measurable environmental consequences of those
09:27businesses, I think it was sort of 15 to 20% of those became not, they had negative EBITDA.
09:35And that just shouldn't be allowed to be the case, because essentially what we're saying is a huge cost
09:39of operating those businesses is being passed to others as externalities. And that's what we want to
09:44avoid in the sort of ideal system. And that's why regulators are beginning to act. And from a financing
09:52perspective, over 1.5 trillion has been invested in impact, and it's growing at an alarming sort of
09:57exciting rate rather at 21% CAGR since 2019. The broader ESG investing market, which is much bigger
10:04than the impact investing market estimated at 40 trillion by 2030. So this is a strong signal to say
10:10this is where business and finance should be playing in the future if they want to access the best
10:14opportunities. Now I tried to find some data in Mexico. So these were some of the opportunities,
10:23400 billion opportunity in terms of improving gender equality in the labor force and solutions that might
10:28be able to help companies to do that or to train women in order to have the same opportunities and
10:34skills and so on, will be feeding into that opportunity. Similarly on digital health, 7 billion
10:41opportunity by 2030. And again, even in sort of the Mexican context, regulators are raising the bar in
10:48terms of what companies will have to report and therefore be held accountable to. I thought this was
10:54also very interesting. Mexico has issued the number of sovereign bonds that are SDG aligned. And so
10:59essentially promising returns to those investors in terms of the sustainable development goals. And then that
11:06is flowing through the economy in terms of public procurement and so on and so forth. So a lot
11:11of impact driven capital kind of moving into Mexico. Now these are some of the numbers. I just also
11:17wanted to tell a story to try and make this point. So this is Bruno Roche. He's the former economist at
11:24Mars. You probably know it from the chocolate company, but also does a lot of pet food and pet products
11:30as well. And he had the story where he said, you know, in the 1950s, following the Second World War,
11:36there was a lot of thinking about where the future of business would be. And at that point, if you looked
11:42at the value of a company, 95, 99, whatever it was, percent of the value of that company was tangible
11:49things on the balance sheet, warehouses, inventory, trucks, so on. Some people got ahead of that and
11:58identified that value in the future wouldn't come from these tangible things. It would come from the
12:03intangibles. Now the people who believe that sort of branding, marketing and the pulling power of
12:08some of those things, and they pivoted their businesses those way, that way, they're still here
12:12today. The ones that didn't, we've long forgotten them. If you think today about Coca-Cola, a very kind
12:18of tangible business, you know, it's got inventory, it's got warehouses, trucks, etc. Most of their value is
12:25embedded in the brand. The fact that you could go anywhere in the world, and on a hot day, you think of
12:30Coca-Cola, that is the power of that company, that is the value where it's at. And Bruno says,
12:38in 2050, we're going to have a similar dynamic, similar shift in what is valuable at that point.
12:44And so he says, it's about the quality of the company's relationship with people and planet.
12:51And that's because people will begin to understand that we can't have businesses that are harmful to
12:57society because they're selling unhealthy foods or because they're damaging the environment and so on.
13:01And they will increasingly see value in companies that have this positive relationship with people
13:06and or planet. And that was Bruno's mission while he was at Mars. And now he's sort of out in the
13:11broader world, trying to influence in that way as well. And I just wanted to highlight another dimension
13:17to this, which is that business is becoming increasingly competitive. So I took the S&P 500,
13:22which is the 500 largest companies in the US by market cap. And I looked at how often that index
13:28changed. So in the 50 years up to 2014, there were 186 changes to that index. So that's companies coming
13:36out of the index, go back into the index, and so on. Now, if you look at the last sort of 10-ish years,
13:42we've had almost the same number of changes, but in a fifth of the time. So this suggests that the rate
13:48at which organizations have to innovate and keep up with change is getting faster and faster.
13:54So what we're seeing is that there's this pressure on companies to look after these externalities
13:59that they have, sort of negative impacts on people and planet, and then, you know, more value being
14:06sort of being exploited from these opportunities into the future and then needing to change at a much
14:11faster rate in order to get to some of those opportunities that we talked about.
14:15So that was setting the scene. Now let's dive in to some of the impact fundamentals. And again,
14:22I think this is helpful because people often get confused between, you know, what is impact,
14:26what is sustainability, what is ESG, and so on. So where does impact actually come from? So if
14:33over here, we have the positive change outcomes for people or planet, that was the definition from
14:37impact frontiers, there's essentially three sources. So the first is the business model. So what are you
14:43making? What are you selling? And who are you selling it to? So I've got a couple of examples
14:48here. So Headspace is a mental health company, it's direct to consumers. So you download an app on your
14:53phone, and it helps you to practice mindfulness and meditation. I think it's the largest one in Mexico,
14:59it's one of the biggest ones in the world. So hopefully some of you are aware of this. And clearly,
15:03from the product itself, what they're trying to do is to help you be more mindful, manage stress,
15:08anxiety, and so on better. I had a look at the Mexican context. And this is a chain of clinics,
15:15where the product is structured around prevention of diabetes treatment, diabetes, and so on. So the
15:22unit that they sell, the good that they sell is health. And therefore, you can see how that ties
15:26into the kind of business model angle and the outcomes that that might create for people and planet.
15:32Now, the second source is around impactful operations. So this is how you run your business.
15:37And it's most typically connected to ESG, if you're aware with sort of the thinking in that space.
15:42So Patagonia is one of the most famous companies here, it's a sort of global clothing company,
15:47and they choose to make their clothes in a very sustainable, circular fashion kind of way.
15:53And so it's not really about the thing that they're selling, i.e. the t-shirt, the trousers,
15:58the whatever, but how they make them that is contributing to impact here, minimizing their
16:02effect on the environment, resource consumption, and so on. Now, I found this organization, a food
16:10company in Mexico, that again, is doing sort of similar things, thinking about agriculture across
16:14the supply chain, how do we responsibly manage that? How do we take healthy foods to the people
16:19of Mexico? And so again, that's not really, it's a little bit about the product in terms of healthy
16:23food, but it's more on how they create that product across the entire value chain.
16:27And the third source is really what you do with your profits. And that could be, you know,
16:32philanthropy, that could be having subsidies for certain people, and so on. So this is Tom's Shoes,
16:39again, a sort of global brand. And what they do is for every pair of shoes to sell, they donate some
16:43money to causes in emerging market countries. So it might be healthcare, it might be clothing, and so on.
16:51This is a big group in Mexico that I found that again, has a very strong kind of philanthropy CSR
16:57Angle working a lot on underserved communities, healthcare, and so on. So again, that's a kind
17:02of more local example. And so the key thing here is that we want to be thinking about the three
17:08sources in a holistic way. So often, people just focus on one, and they say, you know,
17:13we're a healthcare company, so we don't really need to worry about anything else that we're doing,
17:17because that's how we create impact. Or, you know, down on the bottom, it might be a very successful
17:21company selling, you know, just average goods and services, and then they donate some money
17:27to charities, and they say, well, we don't really need to think about our operations or our products,
17:31and so on. And just to highlight how sometimes jarring this can be, it's very often the case that
17:37you will have companies that score very highly on these sort of global ESG indices that are very
17:42bad for people and planet. So some of the top performing ones, for example, are tobacco companies,
17:47and that's because their operations are very tight, but actually the product itself is quite harmful.
17:52And so that's where this weird paradox happens. So we need to be thinking about these three things
17:57holistically. And this is a link there to an article that we published in MIT SMR with a colleague from
18:03Oxford on exactly this framework and how to apply it in business. So you can go and check it out if
18:08you're interested. Now, I just want to highlight quickly that each of these three things can be
18:14very powerful. So that's why we need to think about all three of them. This is an investor based
18:18in the UK, and I believe also invested in Europe called 2150, and they invest across what they call
18:23the urban stack. So this is anything that touches the urban environment. So these are companies that
18:29specifically are trying to make urban environments less environmentally damaging.
18:34Now, across their entire portfolio, they estimate the 2030 potential in terms of emission reductions
18:40as 10 megatons, which is huge. And that will grow as well, because these are startups. So the
18:45companies will be going on their own growth journey as well. In terms of operations, this is Apple,
18:51a company known for its kind of sustainability initiatives. They're already at 22-ish metric tons
18:57of CO2 reduced, and their 2030 goal is to reduce that across the entire value chain, including manufacturing,
19:04production use, and so on. Third example on profits. This is a report, the carbon bankroll,
19:10which essentially looked at money that companies have, but they haven't distributed to shareholders,
19:15and they're not sort of actively using. It's kind of sitting in their bank balance. And often they
19:21invest that in short term investments to manage that pool of money. And this is the environmental
19:27footprint of those small, rather short term investments. So you can see anyone above kind
19:35of Microsoft and up, what that's saying is, at least half of their total emissions sit in how
19:40they manage their treasury balances. So you could get rid of all emissions across Mecca. And yet,
19:47because of that, how they manage their treasury balance would have only reduced the total emissions
19:51by half. And for fintech companies like PayPal that have a huge cash balance, that number is sort
19:57of astronomically high. So again, showing that there's opportunities in all of this to reduce
20:03the impact or to optimize the impact. Now, I also just want to talk briefly about how we think about
20:08impact, because this is also a useful framework. So first of all, we think about what changes will
20:14happen to people's lives. Are we improving their health? Are we improving their education? And so on.
20:19Then who will that change happen to? If you can improve somebody who's very rich, their health, that's
20:25obviously a very different context to changing somebody that's living, you know, close to the
20:29poverty line in terms of improving their health, right? So it's also important to think about that
20:34dimension. How much impact happens? That's a function of three things. So first, how deep is the impact
20:41that we're creating? Are we improving the problem by 5% or 50%? How many people benefit? 50,000 or 500,000?
20:51And for how long? Is this three months or three years? The fourth kind of dimension that we think
20:56about is contribution. And this is really the uniqueness of the impact that you're creating.
21:02So if you are supporting a cause, a charity that many, many other people are supporting,
21:07that is maybe less impactful than going and finding something that no one else is trying to solve and
21:12trying to solve that problem. And finally, we think about risk. What is the risk that this impact
21:18doesn't materialize? So for the investors in the room, when we kind of say financial returns,
21:23there's also a way to think about impact returns. And that is what additional change is happening to
21:28who and how much. Now, by this point, you might be thinking, great, we kind of understand a lot more
21:34how to think about impact. But how does this connect to those business opportunities that we were talking
21:39about at the beginning? So that's what I want to get into now. So this is the question, right? Do impact
21:45companies, again, we're focusing on that sort of right hand part of the spectrum, outperform
21:50non-impact companies? That's the question. And there is some relatively good data for this.
21:55So this is a study done recently that looked at hundreds, possibly even thousands of other studies
22:00and looked at, do they conclude positively for impact, neutrally, mixed or negative. And so you can
22:07see there that the vast majority are reporting positive impact, the effect of impact on financial
22:14performance, commercial performance being positive. There's some neutral, some mixed,
22:19but very little negative. And that's kind of the take home message here. This was quite a detailed
22:24study that I found that was looking at private impact funds, and then having a lower beta i.e.
22:30risk than comparable private market strategies. And that was again, over a long period of time.
22:35Now, I tried to find some more focused evidence on Mexico, not too much out there, but still some
22:42encouraging science. So this is one of the ESG indices that exists, and it closely tracks them,
22:48the sort of main Mexican market index, the delta is less than 1.2. So we're saying that the companies
22:54in this ESG index are performing pretty close to just the general market, suggesting that ESG doesn't
23:00really create a big delta in terms of performance. This was another index that looked at liquid Mexican
23:08ESG companies, and it outperformed the equivalent index without the ESG screening over time. Now,
23:16there are also periods of underperformance. So obviously, you have to track this over time,
23:20but we can see that for two years, the for good index outperformed the normal market index. And in the
23:27last three years, it's been underperforming. But again, suggests that there is evidence that these things
23:32can be pretty close, or in some cases, even the impact companies can be outperforming the sort of
23:39non-impact ones. So the question then is, well, how is this happening? Right? How does impact drive
23:44commercial value? And the answer is that it, you know, commercial and strategic value can be generated
23:49through the genuine pursuit of impact. And I'm going to give you some stats. So increasingly, customers care
23:56more and more about impact, sustainability, and so on. So they're more willing to try, stay, spend more,
24:02refer impactful products and brands. So this stat that I have now that 69% of customers think about
24:09impact in their purchasing decisions, that was from a survey done in Mexico. So, you know, there's a whole
24:15customer dimension there. There's also a product dimension in that sometimes people that are very driven
24:21to solve certain issues, they pick up different insights that allow them to build better products.
24:26We're going to talk about offer loss in just a minute. So I'm not going to go into that example
24:29right now. But you can see there that they are doing much, much better than incumbents at their
24:34value proposition, to be discussed in a moment. Talent is another dimension here that's important.
24:40So we're seeing increasingly the younger generations care more and more about climate, about social inclusion
24:46and cohesion and so on. And so they want to work at places that have clear missions around some of those
24:52goals. So this is a stat from Europe, 80% of startup talent is considering impact and sustainability in
24:59their career decisions. Regulators, as we've already talked about, they are doing more and more to ban
25:06sort of harmful business models, but enable more positive business models. These are examples from the UK
25:11government in terms of treatment of workers in the gig economy, Uber, these kind of companies, but also putting
25:18caps on how much companies can charge on bank loans, for example, as well as healthy food regulation. And I found
25:25similar examples from the Mexican context as well. Lastly, investors are increasingly backing impactful
25:31business models. So that's the European stat, two and a half percent increase in impact financing relative to five
25:37years ago, and 21% CAGR growth in impact investing in Mexico over the last few years. And these are just
25:44some of the companies that I found from the kind of quick search. So there you have sort of five dimensions,
25:49whereby being mindful about impact, integrating impact into your business leads to commercial outcomes,
25:55beginning to explain that how. So I just want to highlight a few of these examples. So this is
26:00Ophelos that we had just talked about. Now, the founders who I met a couple of times, they have this deep
26:05desire to make credit, you know, issuing loans helpful for people at the bottom of the pyramid.
26:11How can we get them to climb up that social mobility ladder? And so they spent a lot of time
26:16with these individuals to try to understand their needs in more detail. And they pulled out three
26:20insights. So the first insight is that those at high risk of default actually want to repay their loans.
26:26So this is not a motivation issue. You know, some people think, oh, these people, they're sort of taking
26:31loans because they want to default on them and keep the money. They didn't find that to be true.
26:36Secondly, it wasn't because they couldn't pay, as in they didn't have the income, but it was because
26:41of structural factors outside of their control. So these people, they might be seasonal workers,
26:46they might be big economy workers, they might have caring needs, health concerns and so on,
26:52which makes their income very abnormal, not smooth. And so what they concluded as the sort of third
27:00insight is that if you can build 100 unique repayment plans for 100 unique customers,
27:06you solve this problem. And that's exactly what they did with AI digitalization and so on.
27:12So there's a chatbot that talks to you and learns about you that then goes to an AI algorithm that
27:16makes a recommendation. Hey, what if we change the repayment plan like this, this, this, the person
27:22says yes, and that gets updated in the back end. And this sort of completely noble product ended up
27:29being much, much better than the incumbents and making sure that people repay their loans instead
27:33of defaulting. Now, another thing I want to talk about is government as a customer. So this is a
27:39company called Second Nature. They're a weight management company trying to prevent diabetes. So similar to the Mexican
27:45clinic that we talked about. And yeah, so that's the product in a nutshell. In terms of impact, 60% of UK
27:53adults are overweight or obese. And Second Nature wanted to solve this problem, but particularly by
27:59integrating with the National Health Service. So they started from day one being very rigorous,
28:04having a lot of data to prove that the product worked, and then getting that into government.
28:10In terms of driving commercial success, well, once they unlocked that government as a customer,
28:15they were able to scale very, very quickly to huge scale. And they've had a lot of help from other
28:20organizations that recognize their impact intent and wanting to do good for people. And therefore,
28:26they want to help out Second Nature. Just quickly on sales. So this is a company called WadeStream. So again,
28:33a kind of financial fintech company. They wanted to create financial well-being tools for
28:39frontline workers. So for nurses, for retail workers, and so on. Reaching 3 million people globally.
28:46This is from the UK context, but most UK households do not have a lot of money in savings. So they're
28:51quite exposed to shocks to their wallet. And so through those well-being tools, WadeStream is trying
28:58to make them more financially resilient. And we have the stat there from them that it saves users £100
29:04per year using WadeStream. But the interesting thing is that that benefit to those workers
29:09actually has organizational benefits on their employers. So this is some examples. So in
29:15financial services, 70% of members of WadeStream feel more positively about the employer. There's
29:22lower employee turnover and more shifts are being filled. So these are purely business outcomes because
29:28of the impact that WadeStream creates. Similar story in retail. So you can see there that second one,
29:3321% reduction in employee turnover, which is a huge cost to business, right? So this is how creating a
29:39company that solves an impact problem can generate business returns. So again, this is coming back to
29:46that core kind of question. What type of businesses do we want to nurture and grow? This isn't about impact.
29:51This is a fundamental conversation about those businesses that we want in society and their effects
29:58on society. And just to give you some examples of how this is being enabled across other countries.
30:04So people are thinking of innovative financial structures for impact. So how can you blend products
30:10together? So market rate seeking capital as well as philanthropic capital can then go and invest in
30:16slightly riskier things because the philanthropic capital provides a layer of risk guarantee for those
30:21commercial investors. So I know this is something that's happening a lot in Mexico and a link to it
30:26there, but also innovative revenue models for those financial institutions. So rather than sort of equity
30:32stakes, for example, can we do revenue based financing where we take a share of the revenue of the
30:37organization? Another way to think about it is impact linked financing. In other words, the sort of return
30:45on capital is generated if you hit certain impact outcomes. So for an organization, they could say,
30:52you know, we're promising to reduce emissions by this much or lower obesity by this much. And if we hit
30:59those goals, that's when you guys pay us for the investment we made in trying to minimize those negative
31:05outcomes. From the government side as well, there's been a lot of activity. So there's been experimentation with
31:11innovation capital. So in the UK, we have something called dormant bank accounts. This is if you open
31:16a bank account, and then you forget about it. And 20 years later, the government can take that money.
31:21Of course, if you ask for it back, they will give it back to you. But they use that pool of money to
31:26invest in innovative things that can be used for social impact purposes. So how can we unlock these pools of
31:33innovation capital? They're also very good at creating markets that facilitate impact outcomes. So we have
31:40carbon taxes across the EU, which means that if you're an organization that emits more carbon,
31:45you pay higher taxes, and that therefore incentivizes you to minimize the carbon emissions.
31:51Also about creating market infrastructure. So this isn't affecting the market directly. But by saying,
31:56for example, you have to report on these sort of indicators, the market can then become more
32:01intelligent about who they send capital to in terms of the performance of those indicators. So we have
32:07SFDR, the Sustainable Finance Disclosure Regulations, and Sustainability Disclosure
32:13Regulations in the UK. And of course, there's some Mexican equivalents, like we talked about before.
32:20So really, the key messages that I wanted to leave you with is, this is a broader conversation than just
32:24kind of impact. It's about the role of business in society. And impactful businesses exist on that
32:30spectrum, but we shouldn't get sucked into being over here or being over there. We need to think about the
32:35entirety and design pools of capital that flow across that spectrum and support the entire spectrum
32:41to succeed. As we've just talked about, impact can drive commercial value. There's a huge, huge
32:46opportunity there. And it's up to the ball to go and take that opportunity and make it real while
32:50delivering positive outcomes for people and planet. And when we think about that, there's those three
32:55sources of impact that we talked about. And it's important to think about it holistically. So we're not
33:00doing good in one place, and then doing harm in another place. The landscape is moving that way.
33:06We've looked at all those trend graphs, they're all sort of pointing up. And so impact-driven finance
33:10and business is going to be an increasingly large part of the conversation. So given that, my call to
33:16action to you is for founders who want to use business as a means for good, that's your drive,
33:21that's your motivation, you can find the win-win. Use some of the frameworks that we talked about,
33:26some of the ideas to find that win-win and then go and convince others that it's possible. To
33:31financiers who want to back and invest the best businesses, you need to be thinking about the
33:35value of impact. The evidence is growing that it's there. And to the government, policy makers, set
33:41helpful rules of the game. Create the incentives that push the rest of the market that way. And that
33:47would be my call to action to you. Thank you very much for listening. Look forward to connecting and
33:52continuing the conversation. Take care.
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