Investing in Purpose-Driven Companies 

Why and how investors can rethink their approach

by Lisa Marrocchino

June marked a record-breaking jump in the Earth’s atmospheric greenhouse gas levels with the highest-ever average measurements of methane and carbon dioxide, according to the National Oceanic and Atmospheric Administration. April 2022 was the first month in human history that CO2 levels exceeded 420 parts per million. These sustained increases in CO2 concentrations will continue to drive climate change, harming our oceans and life on Earth in increasingly devastating ways in years to come. At its worst, without functional ecosystems, our life support systems — including the ocean’s ability to produce half the oxygen we breathe — could fail, rendering our planet uninhabitable. Such dire outcomes must and can be avoided by directing strategic investment to solutions that move us quickly toward a greener, more sustainable future.

Social enterprises must be at the forefront of developing innovative solutions to today’s social and environmental issues, addressing challenges such as climate change and pollution via crucial research and technology initiatives. Smart investors know and understand that investing in environment-focused companies must be a priority. In fact, in 2021, climate tech startups raised a collective $40 billion in funding. The global impact investing market has reached $715 billion and is expanding rapidly, according to a 2020 survey by the Global Impact Investing Network.

In a recently released book, Net Positive: How Courageous Companies Thrive by Giving More Than They Take, the authors posit that a net positive company is one that “improves well-being for everyone it impacts and at all scales — every product, every operation, every region and country, and for every stakeholder … and even future generations and the planet itself.” No company has yet reached this lofty goal, but a number of companies are well on their way. While there is an urgent need for the solutions and capabilities that innovative companies can generate, investors haven’t perfected their approach to supporting such social enterprises. Investments in purpose-driven companies still considerably lag behind other sectors.

Success through Audience Reach

One metric that investors can leverage when considering purpose-driven companies is the ability to engage key target audiences in an impactful and effective way. Does this company have a clear understanding of how it will reach partners or consumers? How much of the general population could be impacted by the company’s offering? By shifting the initial focus from dollars to reach, investors can better understand the immediate impact of a company — the number of people and/or planetary natural systems impacted — in addition to standard monetary metrics. Companies can strategically engage key audiences through potential outreach, educational or entertainment initiatives and corporate partnerships. In fact, partner buy-in is a key metric in showing initial success, especially as more and more companies are prioritizing ESG (Environmental, Social and Government) initiatives and investments.

Success through Data

Another impactful metric that investors should prioritize is “return on data.” We are living in a data-driven world and purpose-driven companies can drive massive amounts of essential data. Novel, data-driven insights can do far more than impact companies’ bottom line; they can drive solutions for a more sustainable future for the entire planet. By developing a clear understanding of the types of data companies can provide, along with strategic data-driven products, investors can draw a clearer line to potential capital. Data, measurement, monitoring and reporting are critical to any successful business and its ability to implement change.

Success through Impact Business Models

Returns for companies that prioritize impact on the environment and society can be the same as in the broader market; socially conscious investing can be very profitable. And, with more companies emphasizing the importance of some element of ESG criteria or purpose-driven work, the demand for solution-driven enterprises will continue to rise. Recent United Nations research shows that green investing efforts will pay off significantly when investors are willing to take risks and make steps toward adopting sustainable business plans. Although there’s a long way to go in adjusting to and normalizing purpose-driven investing, there is hope, and changes are already taking place in the market.

As more companies create sound and impactful business plans, investors must adjust the way they measure success to ensure growth among these companies and a sustainable future for society and the world. Industry leaders have already begun to explore alternative methods for measuring impact. This has resulted in the creation of metrics such as social return on investment, which assigns monetary value to social or environmental change generated by organizations, and The RISE Fund’s impact multiple of money, which estimates the financial value of the social and environmental good that is likely to result from each dollar invested.

To successfully invest in the future of humanity, investors must consider a broad range of innovative technologies at an earlier stage, establishing new benchmarks to drive sustainability and return. Now is the time to prioritize diverting a portion of investment portfolios to social enterprises and funds that leverage capital to advance solutions. These types of investments have tremendous potential to deliver social and monetary returns. In fact, research shows that every $1 invested in sustainable ocean solutions yields at least $7 in return. Specifically, investing $2–$3.7 trillion globally across key areas would generate $10.3–$26.5 trillion in total benefits from 2020 to 2050. The success of an investment doesn’t require a choice between one or the other. Real change will happen when investors change how they measure and weigh social return on investment more equal to monetary return on investment.

Lisa Marrocchino is CEO at Proteus Ocean Group, Ltd., the social enterprise building PROTEUS™, the world’s most advanced underwater station — in essence, the International Space Station of the Ocean. PROTEUS™ is built to enable research seeking to address the most pressing issues the Earth faces. 

With more than 20 years’ experience, Marrocchino is expert in capital raise, business optimization, strategic planning, researching and investing in public, private and alternative investments. She is passionate about the ocean because, without a healthy ocean, humanity would not survive. She believes the ocean is the lifeblood of our planet and to restore it and protect it we must live symbiotically with it.

Did You Know: June saw the highest methane and carbon dioxide levels ever recorded; social investments are critical to see traction in tackling climate change.

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