May 17 2019


As beautifully summarized by Prof. Dipak Jain at CEIBS conference in Boston, today’s era is the one of entrepreneurialism with citizens as enablers and purpose as the goal. Gone are the days of capitalism/company/profits that themselves succeeded to colonialism/country/power.

Simply put, entrepreneurialism is the constant strive to start new businesses or ideas. Often an individual drive, it is triggered by a personal thirst for new ventures, and innovations. Nowadays, it has increasingly become a way of life, and an alternative to challenge the consensus of larger firms, designed to prefer short-term profits over long-term societal benefits. The search for purpose is key to this irresistible shift.

In order to have impactful purposes, one needs to channel investments to it, not only your own but Governments’ and companies’ alike. The nudge for corporates to start caring has been to score them against a list of well-meaning criteria, such as ESG (Environmental, Social and Governance).

The higher the combined score, the higher the representation of the company among the index, hence more investments flow towards them. ESG is a growing investment theme that already attracts $12tn investments in the US only, and could stifle investments for those who don’t comply.

The idea behind serves a dual purpose: 1/ responding to individual investors’ demand for more transparency in responsible investing, and 2/ forcing companies to abide by ethical and environmental standards quicker, at least to preserve their customer support. It works but is far from perfect.

For one, data is hard to come by and sort out, although machine learning is increasingly helping. Most importantly, measurement metrics are focused on limiting companies’ impact and neglect over-arching humanistic goals. There are no measures on how firms work on advancing our societies towards no poverty, zero hunger, quality education, reduced inequalities, or peace and justice. What does it mean then that a company is ESG-worthy if in turn it instigates world conflicts, does not contribute to maintain the public infrastructure it uses, or is headquartered in a city with rampant homelessness and does nothing for it?

Everywhere entrepreneurs are at play to find new ways to measure positive impact, whether it is financial inclusion, reduce predatory lending practices, or give incentives to do better for the society of the environment. Technology and the fantastic leverage it procures to individuals has been a fantastic enabler.

We argue that the future will be to measure impact more efficiently in order to promote it, not only at the corporate level (with an ESG 2.0) but also at the individual level. While credit scoring or the Chinese social credit are controversial measures of a bygone era, a personal impact score could reap long-term benefits for our civilization.

360 Advisory – Markets