Are the two worlds of investment banking and impactful change on planet Earth mutually exclusive?
We don’t think so.
Even though the concept has been around for a long time, the term “impact investing” didn’t take flight until 2007. Historically, that tells you all you need to know about the priority climate change has had on investing. That’s all changing Logan Yonavjak, Director Of Sustainability at International Farming & Venture Partner & Advisor at SeaAhead, and Founder at Fuego Capital, is upending everything the financial industry has to say about the legitimacy of ESG and cause-based investment.
Join us as we discuss:
- What is a “Regenerative Quotient”
- The future of ESG
- Course changes in massive investment institutions
What is a “Regenerative Quotient”
When, as a high school student, Logan saw open spaces and farmland being taken away by the development process, it led her to ask: From an economic perspective, why does it make more sense to build these developments, rather than keep land as open space?
Carrying that desire to create change in the environmental movement through college and into her early career, she started to notice troubling discrepancies in the organization she worked for.
Logan explains, “ The organization itself had an endowment. And the endowment wasn't doing sustainable investing. And I found that to be really perplexing—that you have a global environmental think tank, whose mission is to have an impact on things like climate change, and yet their investment corpus was not invested in any way that was considered sustainable.”
When the CFO asked Logan, “Doesn’t sustainable investing mean we’ll make less money?” she set out to prove him wrong.
The fundamental disconnect between investing and the environment.
Is our generation up to the task of addressing issues of climate change and other environmental challenges? Logan says yes, but only if our values around risk and return expectations continue to shift.
“People need to think differently about risk, their return expectations, and to connect the dots between their investments, and the underlying social, environmental, and natural systems that we depend on.” — Logan Yonavjak
Rather than thinking about the system of investing as a linear model of taking, not giving back, and making money, we must collectively see environmental alliance as a necessity in any investment consideration.
Another of the potential shifts that we can take: developing a regenerative quotient.According to Logan, instead of the narrow view that most take to investing, the leaders of today and tomorrow need to think holistically to embed a variety of different concepts and interdisciplinary thinking to solve problems.
If we truly want adoption of this new approach, the best way for it to become a reality is to have leadership take ownership. If the desire to change stems from the top down, employees will follow their lead. Which is easier said than done.
How company size may play a role in their ability to change.
When Logan worked for Morgan Stanley, she realized that incorporating environmental, social and governance criteria might be too difficult of a shift for the organization to make. When a company has been thinking about finance in a traditional way for so long, introducing such concepts has a hard time gaining traction, especially for someone outside of leadership.
Instead, she opted to work at a boutique investment firm — a place that was much more accepting of change at its current size and because of her leadership role. She explains, “I'm able to set the tone for how to think more holistically and how to embed that into the core value system of how I think about investing.”
The future of ESG
There has been a great deal of uncertain, and even turmoil, in public and private markets lately. But how has this impacted ESG? Has this market correction given rise to opportunities or risks in the ESG space?
While it’s difficult to say exactly what the future of ESG will look like, Logan does suggest that we’re in the middle of streamlining the definition around ESG — something that, up until recently, has differed from industry to industry.
As the definition becomes clearer, organizations will need to step up their focus on using resources in a thoughtful, efficient, and regenerative manner.
“There just aren't that many investment banking shops that focus on impact investing and an even smaller number who specialize in climate tech, circular thinking, and real assets.” — Logan Yonavjak.
In the near future, Logan would like to see more connections between specific industries and better data within those industries connecting ESG factors to cost reduction, revenue generation, and risk.
Course changes in massive investment institutions
While ESG continues to transition, it’s important to know what can be done in the immediate future to help facilitate that change. For Logan, it comes back to connections—between industries, but more specifically, individual bankers.
What Finalis has done to connect bankers on their platform is exactly the kind of progress that needs to happen, according to Logan:
“A lot of the scaffolding has been laid. It's just a matter of the network effect now and people starting to use and see successes come from the platform.” — Logan Yonavjak