Features

‘We need investment that prioritises long-term wellbeing for people and planet’

Published

11 years ago

February 13, 2013

Samuel Johnson once said, “When a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.” So how would the threat of death affect your outlook on life? For Joel Solomon, president of Renewal Partners, it spurred him on to use his business and investment nous to help create a better future for generations to come.

A number of family members, including his father, had died of polycystic kidney disease – where cysts form in the kidneys, causing them to become enlarged. And when he himself was diagnosed with the condition in his early 20s, doctors said he could die very soon – or he could live a long life.

He effectively stared death in the face, and began using his experience to drive change.

Solomon describes ethical investment as “investing that recognises and improves upon the consequences of how money is made”, and we were lucky enough to pose a few questions to him.

Describe how you were first made aware of ethical investment.

As a member since the mid ‘80s of the philanthropically-oriented Threshold Foundation based in San Francisco, I began to learn that there was an emerging field focused on aligning values and money.

I use my access to business and power, to contribute to the health and wellbeing of future generations.

In 1987, I was a founding member of the Social Venture Network (SVN), which grew out of Threshold Foundation. SVN’s goal was to create a network for the pioneer entrepreneurs, who believed making money while doing good was how all business should be done.

At SVN I was exposed to leading entrepreneurs in both for-profit and not-for-profit worlds, as well as their professional advisors and investors. The unifying theme was around doing business while learning to internalise externalities. That could happen through thoughtful company practices, as well as public policy influence that business has, being directed towards the common good as well as the private interest.

How is Renewal unique?

Beginning in the mid ‘90s, Renewal set out to prove that there is huge opportunity in making money while aligning with values and life purpose. “How much is enough?” and “What is our legacy contribution to the betterment of the whole?” became the central goals.

We have stayed true to that commitment, while effectively demonstrating financial success.

Renewal came out of a concept of ‘integrated use of capital for social goods’. My business partner, Carol Newell, committed the majority of her fortune to this endeavour. Beyond our financial successes were many other positive contributions, ranging from bringing entrepreneurial influence to the Foundation and charitable sectors in our region and Canada, exploring mission related investing, into hybrid models and early versions of what is now known as social enterprise, whole portfolio activation to values and mission, social purpose real estate and significant investment in the psychological, emotional, and spiritual, aspects of leadership, as a foundational practice for the challenges of tomorrow.

Our financial investment ambition centres around building the field of ‘money aligning with values’, through taking first risk on strategies we believe will become the norm in the future. We offer proof of concept that helps normalise bottom lines beyond financial alone.

The era of transparency is changing the face of business practices and customer engagement. Soon enough, companies will need to lead the way on community positive leadership, in order to maintain social license to make money

What sectors would you ideally invest in?

Organic food, green products and environmental innovations. We would like to find opportunities in the future to invest in ever more innovative sectors and models, which broaden the tools for investing for change, in more sectors and issue areas.

We need a dramatically different way to think about investment, which prioritises long-term wellbeing for people and planet.

There is more than enough money in the world to solve global issues like poverty and climate change. We are seeing the growth period of invention that will make today’s business practice assumptions, look very out-dated and short-sighted.

Wisdom meets wealth creation.

What sectors would you not invest in?

Because I am an entrepreneurial investor, I am able to move virtually 100% of my investments out of public markets and very large companies.

For practical reasons of size and scale, we look for industries that balance long-term wellbeing for people and planet, while reducing waste, health risks, climate change, species extinction, wealth disparity, and negative impacts.

I came to understand that for most of human existence, ancestors and descendants were the core purpose of life

We only invest with people whose values and integrity represent the best intentions for why they want to build big companies. We only invest where we believe we are seeing an incremental solution innovation, even if it is under recognised.

When thinking about the work you’ve done at Renewal, what is your proudest achievement?

Earning a good financial return while making a positive difference and building a great reputation for authenticity and integrity. We are the real thing.

Launching Renewal2 Fund through the depths of a major recession, locating over 80 individuals, families and foundations, in Canada, the US and Europe, to invest $35m to become our limited partners, and then systematically placing those funds into a growing portfolio of great companies that will make good money for our partners.

You speak openly in your TEDxVancouver talk about suffering from polycystic kidney disease. What impact do you think the condition has had, if any, on your investment outlook?

I was blessed with the awareness that life ends, and that it can happen at any time. The in my face message helped me to consider deeply my values and life purpose. I came from money and business. I was born at the early part of the era of transparency and global information. We were learning a lot about the impact of unbridled economic expansion, population growth, and the limits of the biosphere, along with the travesty and injustice of dramatic income disparity.

I use my access to business and power, to contribute to the health and wellbeing of future generations.

Eventually, I came to understand that for most of human existence, ancestors and descendants were the core purpose of life. In the modern industrial age, we have forgotten that perennial wisdom.

The death sentence opened the doorway for me to discover a longer view of why I am alive.

What are the main changes in ethical investment – in attitude, legislation and activity – that you have noticed during your career?

I use the analogy of organic foods. Something like ‘organic money’ is taking hold. Organic money is now about where organic food was in the ‘60s, ‘70s, and maybe the ‘80s. As the next decade unfolds, the growth rate of the industry aligning money with values is going to grow dramatically.

The rise of the B Corporation and string of successes with legislative support for these externality focused responsibility commitments of companies, the democratisation of giving and investing via new digital tools, and the proliferation of networks, conferences, MBA programs in sustainability, and rising demands on university campuses for divestiture from carbon creating in the endowment portfolios, are just a few of the change signals.

When we raised our Renewal2 Fund three years ago, it was harder to familiarise people with the impact investing type rationale.

Today, there is a clamouring and wealth managers are scrambling to find product to move their clients into, whether they are individuals or pension funds made up of millions of people.

How do we make ethical, sustainable and responsible investment mainstream?

Steady patient effective hard work. We need a diverse universe of experimentation, risk taking, learning through doing, and the development of dozens of products and services which offer astute, authentic, and accessible options.

The full spectrum of risk and return categories must be filled out with capable professionals and offerings. Business education must step up to meet the challenge. Success stories must be built and told. Policymakers must think ahead and be bold in shifting taxation, regulatory, and subsidy strategies from the old economy to the new.

And the prognosis for his disease…?

At the time of his diagnosis, Joel had little influence over the outcome of his illness. But we’re delighted he was fortunate to have a successful kidney transplant later on in life and is such a powerful advocate of ethical investment.

Renewal Funds is now in the design phase for Renewal3 Investment Fund, which will continue the social venture capital model of Renewal2, and Instinct Fund, a smaller seed pool. Both are coming in 2013.

Blue and Green Tomorrow