In the aftermath of the Montreal Climate March, the Desautels Sustainability Network held the Sustainable Finance Summit on September 27. The event focused on impact investing: environmentally conscious investment coupled with a financial return.
Result-oriented entrepreneur Alain-Olivier Desbois, who has practiced impact investing and venture capital for over twenty years, opened the seminar with a discussion of social value funds. A senior manager at SVX Quebec, Desbois has experience coaching and financing entrepreneurs to create start-ups and private impact funds. These organizations derive from a traditional, purely profit-driven business model by employing an “impact-first” strategy.
Desbois outlined the history of sustainable investing, describing the first period as, resulting from the sociopolitical changes of the 1960s, pressure was brought upon corporations to enact environmental changes. The second phase saw the integration of financial approaches with sustainability. In particular, the 1987 Brundtland Report called for country multilateralism to foster global sustainable development. Desbois called the post-2006 period the “Rise of Impact” stage, in which the recognition of a “system failure” in responding to climate change has brought about significant “system change.” Desbois highlights the 17 United Nations Sustainable Development Goals as a major indicator of systemic change following the failure of previous sustainability goals. While the previous century of consumer choices centred around good products, good companies matter to an increasing degree, Desbois posited, citing that “seventy-three percent of consumers care about the company, not just the product” when making a product choice.
Desbois described various startups that his firm is investing in, including growing ventures, scaling companies, and equity funds with a focus on sustainability One notable example was Ecotierra, an environmental services project empowering small farmers to responsibly use land to promote sustainable development. For example, the company aims to resolve the environmental damage slash and burn farming does to the planet.
The Future of Sustainable Finance
The Impact Investing Segment was followed by a panel composed of senior analyst at National Bank Investments Mari Brossard, CEO of Impak Finance Paul Allard, VP of the Investment Stewardship Group Stephen Kibsey,and Director of the National Social Value Fund Steve Petterson.
Brossard, who was responsible for implementing Environmental, Social and Corporate Governance (ESG) factors, discussed the complexities of reporting climate risks to the public. To improve transparency, she cited requiring asset managers to be part of the UN- sponsored Principles for Responsible Investment (PRI), a group of investors working to implement six sustainability principles in the finance world. She also noted the importance of companies reporting under the framework established by the Task Force on Climate-related Financial Disclosures, which develops climate-related financial risk disclosures for use by companies in providing information to stakeholders.
When prompted about the future of sustainability in finance, Allard urged business leaders to critically examine past methods, arguing,“We need to go to the next level, which is called the impact analysis.”
Allard described the use of ESG and CSR (Corporate Social Responsibility) in business as a “total failure,” calling for the use of impact statements akin to traditional financial statements and of PRI as a collective framework to build impact management projects. He highlighted the necessity of companies to disclose environment-related activities, asserting that both positive and negative impacts need to be examined candidly. He argued that, for example, just because Walmart has balanced gender ratios, responsible investing cannot neglect their other social externalities, and that “it makes no sense that [they] win SDG indices”.
Discussing how sustainable finance should be taught at McGill, Kibsey focused on responsible investment, arguing that sustainability “shouldn’t be a subject on the side.” He called for it to be treated “like mathematics, involved in every course we take” at Desautels. Kibsey also noted that while the financial world had a history of marginalizing women, the inclusion of social science methods in sustainable finance may offer more opportunities for women.
Discussing how sustainable finance should be taught at McGill, Kibsey focused on responsible investment, arguing that sustainability ‘shouldn’t be a subject on the side.’
Seeing university as a unique opportunity to impact the business world, Petterson advocated for more opportunities within schools to focus on sustainability in finance. A recent UBC graduate, he reflected on the difficulty he had in petitioning for more sustainability classes at UBC’s business school due to the rigidity of the upper administration. In a final message to students, he promised that “you’ll have ideas that are valid…[they] need to become entrepreneurial ideas.”
President of McGill’s Sustainable Business Network and co-founder of the Montreal Social Value Fund (MSVF) Maxime Lakat ended the summit by explaining how the MSVF provides the financial incentive for impact-oriented companies to exist. The fund invests in enterprises and non-profits that tackle social and environmental issues for the Montreal community, including Chop Value, a “social purpose business” focused on waste reduction. Lakat noted that he “hopes that [his] major will not exist anymore” after sustainability becomes incorporated in standard business practices.