Patrick Goodman, Co-Founding Partner of Innpact, was the special guest of the Future Leaders Forum Conversations organised by ICMCI on Wednesday 27 April 2022.
The ICMCI Future Leaders Forum brings together young consultants from all over the world in a structured effort to boost the conversation about the future of management consulting. This time, the session was dedicated to impact investing, a very first for the organisation. How to generate sustainable impact for the benefit of clients and, ultimately, communities? The event was facilitated by Angelica Susio, an M&A Analyst at Total Specific Solutions and a member of the ICMCI Future Leaders Forum.
Defining impact investing
Patrick Goodman began by recalling the difference between traditional investing, ESG investing, impact investing and philanthropy. Impact investment is part of the overall spectrum of investing: starting from traditional investing aiming for financial returns only; going to responsible investing with positive and negative screening; evolving to sustainable investing with an ESG component; reaching impact investing with its impact integration; and culminating in philanthropy focusing on impact returns only. Impact investments are investments made in companies, organisations and funds with the intention of creating a positive and measurable social and environmental impact alongside financial returns.
Thus, impact investments are characterised by three elements:
- Intentionality: The intention to exert a positive social or environmental impact
- Impact Investment Strategy: Use of evidence and impact data to set targets, design investment strategies which are effective to the identified needs, and identify indicators to measure performance against targets
- Impact Measurement and Management: Use of impact performance data in decision-making to manage investments towards achievement of defined social and environmental objectives.
Key elements are the specific UN Sustainable Development Goals (SDGs) an entity is aiming for.
The key role of the consultant
Patrick Goodman highlighted the key role of consultants in this context. Consultants are needed to help at the various stages of the development of impact projects. One of the first steps is to be able to analyse the gap: what is missing in the market and if there is a need for specific funding. Consultants can help with identifying where there is a need and where a role can be played. Once the gap is identified, the next step is to see if there is space for the investment to be made; crucial at this stage is measuring which can also be performed by consultants. They bring specialised knowledge and expertise, helping to identify the impact.
The current market offers clear opportunities in the area of climate action: energy independence, investing in renewables around the world, also investing in biodiversity. The good news is that investors are keen to support such actions, both private individuals and institutional investors.
Consultants should be made aware that they have an impact in the way they advise their clients and they should be able to show the impact to their clients.
Leadership Moments and Sufficiency
Patrick Goodman opened up about some special times in his career leading up to impact finance. In a career changing move, he was asked to relocate to help save the activities of the bank he was working for at the time. He found himself in a situation with an excellent sales person and an excellent operations manager on the other side who were not talking to each other. He thus needed to create the relationship management team there to ensure progress and profitability. The trust he was given was essential to help in his work. The second special moment is also about finding the right skills as seen in the creation of Innpact. Innpact started as a subsidiary of a microfinance manager and its gradual expansion proved the need for and the worth of collaboration. Being a leader is being able to share and different profiles and different competences can work together as the mix of leadership is extremely important and extremely valuable.
On another personal note, Patrick Goodman spent some time on sufficiency as a concept and invited everyone to think about what was really important beyond covering one’s basic needs. In Patrick’s words, it is family, social links and what you have done in the world. Here comes the place of Innpact: the company is all about cutting the cake in a slightly different way to ensure that all stakeholders have a slightly bigger share.
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