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Towards NET POSITIVE #impactimperative 2.0

Transcript of the keynote of Hedda Pahlson-Moller on November 30, 2022 at the ECB conference on Leadership and Digital Transition

Greetings from Brussels where I just opened up IMPACT WEEK to celebrate the social enterprises, impact investors, public sector and philanthropists working collectively on designing and scaling solutions for todays’ challenges. These events are springing up all over the world, with the most unusual suspects showing up take part.

So i’m bringing some of that energy here to you.

It’s a pleasure to meet you all here on the zoomaverse – or webexeverse.

And I am here today to talk about the ubiquitous ‘S-word’ – yup: Sustainability. I can’t see you, so not sure how many eyeballs are rolling.

And yes… it is murky, daunting and guilt-inducing. And worst of all, it means so many different things depending on the context.. the organization.. the culture, and even the individual.

The Economist wrote recently that they consider it a ‘wooly’ term (not unlike innovation) – because there is no opposite, no antonym - it becomes fuzzy and loosely applied.

The common denominator around the topic is there is a sense of urgency that we need something ‘different’ as our given economic and social models are clearly floundering; the problems are not just ‘solving themselves’. Wealth isn’t ‘trickling down’ (or if it is, there are some seriously clogged pipes). And somehow we brought nature in as an expendable bargaining chip for our incessant gambling addiction for profits - and discounted that it is actually our lifeline.

What we are missing are some serious guardrails – something along the lines of Kate Raworths Doughnut Economics, you may be familiar with – it sets some basic planetary ceilings and social floors that provide thresholds when our systems – or our very selves – slip into unthinking excess. There’s a safe and just middle (that’s the doughnut part) that we can stick to. We just need some calibrating.

And right now, i’m speaking to some of the best calibrators here in Europe.

My title is ‘impact catalyst’. Impact we understand is obviously both positive and negative. I’m working on improving the former and reducing the latter. My name is Hedda Pahlson-Moller and I have been a ‘field builder’ for the impact ecosystem for a long time and run an organization called (two Is – I will come back to that). But i’m an active investor and board director on funds in both private and public equities as well as family offices that are all implementing values – beyond financial – in their investment strategies.. and becoming part of the wave of finance dedicated to contributing to solutions.

Anyway, that’s me and what I do. Now let’s dig in.

There’s been a lot of recent coverage of climate change and COP – which just ended and was not much of a success unfortunately.

But the first thing I need to address is that sustainability goes far beyond climate change. I am certain no one in this audience has missed the 17 SDGS (the sustainable development goals) – they identify the critical social AND environmental challenges that are impossible to separate or even prioritize. It’s been called ‘a survival kit for humanity’. The awkward thing is that we designed the goals in 2015 with a target to solve them by.. 2030. Last time i checked that’s really soon. And nobody will claim we’ve solved poverty or access to healthcare and clean energy.. or any of the others for that matter.

There is an unfortunate habit to pit planet versus people… which is nonsensical as they are both intrinsically interconnected.

The zero-sum game approach to addressing planetary vs societal health is both misleading and counter-productive. We cannot solve climate change without addressing the human element – both our contribution to the problems and our buy-in to the solutions. Many politicians have learned that the hard way.

One attempt at combining people and planet assessments is the popular ESG acronym (also in the news for unfortunate reasons) and that gives us a few helpful compartments to tackle the S-word.

But our focus tends to stick on the first letter.. the E = Environment.

There’s an obvious reason for that – and it’s not just media spotlighting climate change. We tend to stick to environment and climate metrics because it has the most readily available data for measuring. It’s concrete and accessible.

But If we want systemic change we need to think in SYSTEMS. And ECB of all institutions will understand the complexity of what that entails…

You can’t solve a rubics cube one side at a time.

We are finally familiar with the concept of a footprint – the mark we make on this planet. While we absent-mindedly meander through our daily lives we leave… imprints.

Big and small, sometimes deep. Our presence is rarely unaccounted for.

And it’s not always physical or visible the marks that we make – much of it is unseen until there’s an awful mess or ecosytems are wiped out.. and then we have that ‘uh-oh’ moment and the blame game starts. Certainly not the most attractive of human behaviors.

We are becoming more savvy at measuring our impact on this planet – in terms of carbon emissions, waste, biodiversity loss… Science and technology have given us tools to track and monitor critical data –even down to our own contributions.

We don’t seem to recognize or know why we consume most of what we do – it’s like auto-pilot in human coding. We will discuss that later. But we do know that we leave significant footprints. And they are not nearly as beautiful as this image.

Let’s try another image with a different concept - unlike our footprint that we inadvertently make as we tread through life, our hand print is purposeful.. We place it with intention and consideration. This is the positive impact we can make on people and planet.

For example, perhaps more than just reducing your carbon footprint or waste, how do you influence others to follow and keep moving the needle?

And while we can (and must!) reduce energy consumption – we can also use or invest in renewable energy sources and put energy BACK on the grid.

Recognizing the inevitable ratio of positive to negative impact is what we call ‘The Impact Imperative’ (yes the two Is in TIIME)- it is the awareness that we are constantly creating both. And the ratio of good to bad or intentional to unintentional is something we must endeavor to continuously improve.

Our goal, my friends, should not be net ZERO – it should be net POSITIVE.

We want to go beyond reducing harm to leaving a positive imprint on this planet and all the living creatures upon it – ourselves included.

We need to re-set objectives .. and expectations – to more hand than foot if you will 

But we have a math problem, folks. and that’s where you come in. Because finance and policies are the infrastructure that’s required - and a strong foundation for systems change.

The issue is that the cost of the challenges we want to solve is incomparably larger than the resources we have dedicated to solving them.

Even before the pandemic and war shook the global economy, climate finance had stagnated. Total public and private funds spent on climate mitigation and adaptation averaged $632 billion per year in 2019/2020– we need to move that towards 5 trillion.

And the bulk of the funding went to high-income nations on funding for solar and wind technologies — little headed where it’s most needed: in the global south.

Even the new and much-needed carbon markets that finally set pricing and some kind of awareness of emissions ended up with misguided credits going towards capacity that is neither critical nor related to carbon – but that’s a story in itself.

A recent quote from Paul Polman in Harvard Business Review sums it up nicely (I know Paul well so I wont try to imitate his voice in case he hears about it). he said “It’s increasingly absurd and surreal to have to justify investing in our very survival”.

Impact investing is what I’m passionate about - it is defined as investments made for financial AND societal returns that have a clear intention to solve a problem - this impact is measured and managed. Obviously avoiding harm is fundamental so ESG management is built in (you can’t just solve problems by causing others).

The GIIN (Global Impact Investing Network) estimates over 1 trillion USD has been deployed for verified measurable positive impact – but that’s still only a fraction of what we actually need.

And to unlock the potential of impact finance we need ALL finance players on deck to blend capital and drive the transition. We certainly need you.

This feels like a nice moment to share a short narrative about the power of diversity as a tool for change (and also share the term JEDI – Justice, Equity, Diversity and Inclusion – it’s an actual investment strategy). Take for example women, who are disproportionately impacted by climate change… but they are not only victims. These women on the frontlines are also the key to solutions and have the know-how to deal with the challenges. We really need to listen to THEM to help us survive and navigate the new conditions we are facing…. We really need to start listening full stop.

Beyond the math problem, we have the US problem. The human problem.

Our basic instinct will always be to put things in compartments – or even better: binaries (like people vs planet). The world feels safer and easier to navigate.

It was Hans Rosling who shared this fundamental human behaviour in his book FACTFULNESS. He’s a Swedish physician and academic and he was always petitioning us to recognize the good, or at least the better..

He provided data-driven, evidence-based arguments for the improvements and positive trends that are leveling the global playing field. He provided a sense of hope, which is critical to stimulate change.

As he always managed to find optimistic arguments and data to support it, I try to follow in his footsteps – no, no his HAND print.

I sincerely believe that we all suffer from a sense of dissonance in daily life – in one way or another.

The person you are at home with your family or loved ones.. in your neigborhood or communities… is rarely the same person that shows up at work and falls into patterns and behaviors that we associate with the performance-optimizing, growth-obsessed “rational” work place (i air quote “rational” because it’s really anything but).

Humans are very contextual – as principled as we may be in our personal lives or in environments where we feel safe and comfortable, somehow we are able to park our more altruistic or fair mindset when our ‘professional selves’ take over - and adapt to work norms that aren’t always values aligned.

I’m curious - do you believe you bring your ‘whole self’ to work?

I know when I ask most people who may be very vocal about sustainability in their homes or diets – perhaps regarding mobility or consumption, they’ve rarely considered how their financial assets are managed or what a significant influence that has on the actual problems.

And in the workplace, there seems to be an even larger gap – as these organizations have so many people within their operations who feel the same way. We need courageous conversations and leadership that recognize the power of purpose.. and keep pushing and encouraging this shift.

I can provide endless business cases for why you should invest and support sustainability and positive impact – for risk mitigation, for harnessing trends and talent, for capturing markets and opportunities…

But you know what? It’s fundamentally a very basic moral imperative. You just have to ask yourself with integrity - what profit margin can possibly outweigh the basic pleasure (and need) of breathing clean air and taking a swim in unpolluted water… or walking through a forest full of birdsong..

Even before I can feel remorse for future generations that are not likely to experience this… I already want to fight for it myself! I want these things. So think about it - we can actually harness our own narcissism to make the necessary changes.

First we need to have the moral imagination to envision a better and more fair.. and reasonable system than what we have. A system that recognizes the value of nature and people regardless of the lottery card of life they drew when they were born into this world.

So what can policy makers do?

Well we discussed the need for guardrails -– and thresholds and clear markers. We need concise definitions and metrics and frameworks – not just tick boxes. This is the guidance that leading institutions can provide to set the bar HIGH. We need to have consistency in responding to transgressions. The ESG backlash is a clear indication of that. Policy can also encourage and incentivize better behavior. What conditions and rates and catalytic capacity can our policies create? I have some ideas, but I’m interested what you think. Once awareness and intention and frameworks are in place, we can continue working towards implementation. And there are ways to facilitate and expedite change – but these tools need to be wielded carefully – like technology

We have a tendency to believe or wish that tech will solve .. everything.

But it is an ENABLER.

With intentionality focused on solving societal challenges, we can accelerate with data and technology. But we need to add transparency and accountability.

What we need are tools and systems that help us manage our energy usage and reduce waste, that ensures our safety and wellbeing so we ALL have the opportunity to thrive.

And those who hold the purse strings will control what gets funded and scaled..

A relevant quote I recently heard: “The head of the financial markets leads the tail of the real economy” – that’s fitting for this conversation.

Technology is extra tricky because it can be a double-edged sword.

Take for example surveillance technology (the dreaded big brother spy ware), which is a terrifying concept for libertarians and many others, but if you harness it in a mindful and targeted way to find abducted children in busy cities (which it’s been successfully used for), it suddenly takes on new potential and meaning.

3d printing can be used to print out all sorts of junk – or… you can produce lithium free batteries (with nature-based zinc!) or even cement without any of the byproducts. How amazing is that?

Drones can spy illegally and unethically, or drop bombs…. – or they can drop medical packages and life-saving support to remote areas. They are also used as climate tech to track weather patterns and safeguard lands and agriculture.

It really all depends on the user intentions and those guardrails – the very things that policy makers can set.

I’m afraid we are going to have to UNLEARN certain concepts to really expedite this crucial transition.

Here are a few of the basic principles:

· We need to invest in REGENERATIVE (rather than extractive) systems – that means shaking this mindless approach to take, make, consume.. and waste. ..

· And we need to think CIRCULAR – pricing in the costs of creating something to putting it back into the earth.. designing systems without waste.

· And then of course shareholder supremacy needs to be replaced by STAKEHOLDER.

Everyone I’m speaking to today has influence and AGENCY.

Please don’t wait for ‘empowerment’ – you don’t need permission to contribute. Don’t be passive. Observation time is over.

You need to recognize the power you already wield to make the necessary changes, even if they are incremental. We always say that sustainability is.. a journey.

Let’s aim beyond a lighter footprint or even NET ZERO – let’s commit to the baseline of the impact imperative and managing that ratio urgently and efficiently.

We need to aim for net POSITIVE and create handprints to lead us to a brighter more hopeful future.

TIME, my friends.. is NOW.

Thank you


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