Shut up, ask questions and embrace the struggle: Jed Emerson's plea to impact investors

Jed Emerson has never been afraid to tell it like it is. Now, after 30-odd years of exploring impact and purpose-driven capital – and eight books later – he believes the field has become ‘lazy’, offering superficial answers to humanity’s most difficult questions as we skip straight to the ‘how’ of tactics and strategy. The advisor, author and (former) keynote speaker tells us why he’s ready to stop talking – and why he hopes the rest of us will do the same

In the 1980s Jed Emerson was involved with a movement that helped to smuggle war-displaced refugees into the US. They would often sign off their letters, he recalls, with the words, ‘celebrate the struggle.’

It’s a mantra that’s sorely lacking in his current sphere of work: impact investing, he believes, has been taken over by efforts to simplify, define and streamline things – and an unhealthy reluctance to acknowledge just how little we know.

“I get it, I understand the inclination, and if we’re going to talk about scaling impact you have to have standards,” Emerson tells Pioneers Post via video call from New York, where he and his wife are currently relocating from California. But people seem to expect “easy answers to extremely complex questions… I don't think impact is easy, and I’m not necessarily convinced that it should be easy either.”

Emerson's career has taken him from working with homeless youth and teen prostitutes, through leading a venture philanthropy fund in the early 90s, to becoming an influential name in impact investment; he published his eighth book on the topic last year, The Purpose of Capital: Elements of Impact, Financial Flows and Personal Being. Unlike his previous tomes, though, this one takes a much more reflective stance, delving into the historic roots of how we understand capital, investing and wealth management, and calling for more connection between how we think about finance and about our lives and the planet.

Lazy thinking

Where did this new direction spring from?  

“About three years ago, I realised that all of my conversations had devolved to strategy and tactics and metrics and deal structure and all this kind of sh*t,” he says. “And I thought, wait a minute, these are all means to an end – what is it that we’re actually trying to do here?

That’s problematic, because failing to answer these bigger questions – the ‘why’ – simply causes disagreement and confusion when it comes to the detail.

“Part of why people have such a hard time getting their head around the ‘how’, is that they’ve kind of blown by the ‘why’. They… just assume we’re all here for the same good.” In fact, individuals have different understandings of what matters: “You may share the same long-term goals but you don’t share the same intermediate goal”.

Good Deals + Beyond Good Business

But figuring that out is hard, so we offer up “light” responses to “what are fundamentally deep and profound questions of personal meaning and purpose,” he writes in The Purpose of Capital. Our field “has become lazy.”

Some may bristle at the accusation, but Emerson is as well-placed as anyone to take a view. He coined the term ‘blended value’ back in 2000 (the idea that value is a blend of social, environmental and economic elements), established the first formalised framework for social return on investment, and co-authored the first published book on impact investing. He has advised some of the world’s most influential family offices, including Blue Haven Initiative – one of the first to be established with the explicit mission to invest 100% of its assets for positive impact.  

In fact, Emerson is uninterested in clients who want to allocate only a portion of their investment to social impact. That’s fine for some, he acknowledges – “I realise there’s a lot of people who work their way into the [impact investing] practice – but that’s not where he wants to be: “I really just want to work with people who are ‘all in’.”

He’s fairly scathing, on the other hand, of traditional investors who turn to impact investing as a market opportunity and a chance, as he puts it, to “make up for all the sh*t they did in the City or on Wall Street”. And what really grates is the assumption that they know what they’re dealing with.

“This isn’t just finance with a little impact patina, it’s fundamentally a reconsideration of the nature of value, of economics and finance. It’s not just doing well and doing good.” Revisioning the purpose of capital and economics isn’t something you can “just take off the shelf”, but something “you really have to struggle with”. And whatever you learn when you come out the other side, he adds, will very soon be dated, and you’ll need to go and learn all over again.

Facing ignorance

What would he like those newcomers to do, then?

“In some ways I’d like to see all of us do the same thing, which is not lead with our answer,” he replies.

That sounds straightforward enough, but Emerson suggests our system is designed to favour answers, not questions. We create a ten-year fund – even though we know real change will take longer – “because that’s what people are used to, and it’s the easiest way to structure it”. Then fund managers have to raise money and promote their way of working, “and that becomes the solution.” After all, if you’re asking for cash, “you can’t say: ‘well, it’s kind of an iterative solution to a very complex set of issues… you have to say: ‘here are my metrics, here’s how we’re going to show impact, look at this great team – they’re experts.’” In other words, “you lose the opportunity to create better solutions and better ways to think about stuff”.

Similar pressures drive speakers on the conference circuit: “You don't hear people say: ‘Actually, I’m just dumbf**ked about this. I have no idea. I don’t know why we still have these problems’”. Instead, people get on stage to share their successes; even failures are couched in positive terms. 

Emerson, of course, has himself spoken at the likes of the World Economic Forum and the Skoll World Forum. And, as an advisor and “pseudo thought-leader” (his words), he doesn’t deny the part he may have played in the wrong turn taken by the sector in recent years.

But he’s very clearly in thinking mode now – prompted in part, he says, by recently turning 60 and facing several bereavements. And the more you reflect, “the more you understand how little you know about anything. And how largely ignorant most of this conversation is.” He’s considering avoiding conferences entirely next year, much preferring a coffee with someone to the “massive consumption” of ideas that happens at an event. On his website, he claims he “has tried to move away from giving solo keynotes due to an awareness that the real answers we seek will come not from our debating each of our positions and promoting our approaches/writings, but rather from the space in between what each of us may currently believe”.

Does he see others willing to dig into that space?

“Oh yes – I think that’s why the book is really getting traction. I think there’s a very deep hunger for this type of exploration”.

If that exploration hasn’t yet been very public, it’s because no one wants to admit ignorance. But Emerson thinks the questioning is inevitable. The growing market for impact investing means professional wealth managers or advisors are having to look at their skills and learn a whole new language – and for most of them, doing so “can’t help but set off a host of questions in terms of your own life… is it enough that you’re helping your clients be wealthy, but helping them finance the destruction of the planet?”

Finding answers

Those hoping Emerson has done some of the thinking for them will be disappointed. Having spent his “whole life telling people what they should do,” outlining next steps is, he says, “not my place”. The book pointedly does not include a list of recommendations, nor even highlight best practices. Is that because there aren’t any, or because he doesn’t want to be too rigid about what that might look like?

“A combination of both… The problem with case studies is you focus on someone else’s experience of reality, instead of going deeper on your own journey which should help you frame your answers.”

He does highlight one broad source of knowledge – one that’s much overlooked.

“We think we’re smarter and have better technology and are more insightful than generations that came before. So we don't really pay attention to history or experience, much less to the wisdom that is in multiple cultures that could help us think through how to approach the current challenge of today… These are the fundamental questions that humanity has explored for centuries and centuries.” Emerson doesn’t single out a particular community or philosophy, but says that rejecting our current “dualism” – the separation of economy from people and planet – takes you naturally towards “indigenous communities, tribal communities, communities that value the Earth and our relationship to it as on a place, as opposed to a hierarchy.”

What’s clear is that our understanding of capital is a “social construct,” derived from “a set of reflections and deliberations and experiences” that vary dramatically from, say Norway to China – two countries Emerson has recently visited for work and to discuss his book.

The critical thing for each of us, he believes, is to recognise those cultural forces, but also question them, rather than “inherit and unquestioningly embrace the purpose of capital as defined by others.” And – hardest of all – explore these questions with others, including those we may disagree with. That’s “tough stuff”, admits Emerson. But we have no choice but to “shut up… [and] be really open to hearing where people have been… and where they want to go, and then see how we might together create other ways to think about alternatives for both of us.”

Be aware of our ignorance, embrace “dialogue and exploration” and “the right answers, I think, will evolve in the middle.” The struggle looks set to continue.

Jed Emerson will be in conversation at Good Deals + Beyond Good Business on 21 May – tickets are available here.

Jed's latest book, The Purpose of Capital: Elements of Impact, Financial Flows and Personal Being, is available to download for free, or in hard copy at cost price from booksellers.

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