3 Skills Impact Investor Leaders Need
For the next few months, our friends and Net Impact members at HIP Investor will be contributing posts to help you break into the field of impact investing, learn how to measure impact across all types of investments, and find great places to work.
In our last post, we pointed you to the top 10 leader and laggard impact companies to work for, as noted in the HIP 100. We know many of you currently work for some of these leaders and laggards, so we're here with some insights into the skills, talents, and innovations that we think you need to continue the great work of the leaders -- or to help the laggards improve their rankings in these indexes.
1. Analytical Rigor
Whether working within a large organization or seeking out a job in the field, analytical rigor is a must in order to create significant impact and remain competitive. Sustainability professionals within companies prioritize and then quantify and measure sustainability initiatives within their firms, like Danone does on its top four initiatives. Similarly, successful sustainability analysts are able to uncover knowable but largely ignored public information on companies and guide impact investors toward more intelligent investment decisions for both themselves and their clients. The most competitive sustainability professionals speak the language of finance. This means being able to tie sustainable management practices to the bottom line of both large and small organizations.
More specifically, impact investor employers are usually looking for candidates with proficient skills in Excel – like being able to calculate a net present value and discounted cash flow, perform pivot tables, and utilize the VLOOKUP function. Candidates should also be able to read a balance sheet and name the assets and liabilities.
The field of impact investing and other types of sustainability professions requires data-driven, quantifiable reporting in order to continually make two cases: the first case for socially responsible investing and the second against business-as-usual. Practitioners need to able to carry out rigorous analysis of a variety of indicators, many of which have been previously ignored.
2. Collaborative Entrepreneurship
Since impact investing as a field and discipline is still in its early stages and has not quite reached a critical mass, working as an impact investor requires sharing ideas. Impact investing seeks to reinvent capitalism as a less extractive force to a more regenerative mechanism for solving human needs. For this reason, impact investors need the skills to forge relationships across disciplines. Entrepreneurship, in this field, is more about the collaborative practice where the best available information is shared among like-minded professionals rather than a competitive landscape.
In addition, collaborative entrepreneurship requires talented teams to work well together by recognizing the unique contributions of various disciplines. Of course, an MBA serves one well for commercial skills, but, increasingly, the nuanced educations and skillsets of MPAs (Masters in Public Administration) and MSWs (Masters in Social Work) are highly valued. A multi-disciplinary approach not only facilitates more diverse teams, but also helps build more resilient solutions to the seemingly intractable problems the field sets out to solve.
3. Compassionate Systems Thinking
Systems thinking is a skill that is highly valued among sustainability professionals and entails the process of understanding how different parts of a system relate to and influence each other. The ability to think in systems allows talented potential employees to seek out companies that rank higher on some of these indexes for their environmental and social performance. This is because they fundamentally understand the interdependence of social and environmental factors on financial returns, as these factors make up the financial system as a whole.
Adding a compassionate component to systems thinking aligns well with the goals of impact investors and socially responsible businesses. However, even those who work for some laggards can help create greater impact on society from the inside out. As an example, Chevron earned a perfect score for its tenth consecutive year by the Human Rights Campaign’s Corporate Equality Index for its efforts in both protecting and expanding workplace equality for its LGBTQ employees. Some of the skills associated with advancing compassionate systems thinking include acting as an ambassador to bridge cultures through reflective listening and finding common goals. Chevron recently embraced a more progressive approach to inclusive health benefits and anti-discrimination policies, an effort that likely got traction because its employees centered the business case around the financial return for introducing these initiatives. After all, research has shown that when employees feel engaged, firms could generate higher returns.
A compassionate systems thinker also has the ability to read between the data and recognize other societal factors that contribute to potential financial returns. For example, one of our HIP analysts discovered that nurses from one hospital system in Oregon were essentially protesting the hospital’s administration due to staffing shortages. This information factored into the entire hospital system’s overall rating since it indicated that management practices may be inhibiting the hospital’s ability to deliver effective and efficient care for patients.
Regardless of whether you work for or want to work for a leading impact company or you find yourself working for a laggard company, it is important to remember these skills and talents that will help bring innovation wherever you land in a company.
HIP (Human Impact + Profit) Investor is an expert in rating investments (4,500 companies and 4,000 governments and nonprofits), applying those ratings to portfolios, and managing money for investors. In addition to measuring impact, HIP’s Ratings are leading indicators of future risk and return potential. HIP's Ratings measure quantifiable results, such as human capital value and carbon efficiency. HIP serves investors, advisors, fund managers, and 401(k) plans seeking to manage future risk, return, and impact.