Book Review: Impact: Reshaping Capitalism to Drive Real Change

Sir Ronald Cohen is one of the giants–if not the most giant of giants–who have championed impact investing. He has set forth a career’s worth of thoughts in a new book entitled Impact: Reshaping Capitalism to Drive Real Change.

Sir Ronald’s background is an impeccable fit for authoring this book. As he tells us in the introduction, he “discovered venture capital just as it was emerging” (p. 2) and he brought it back to Europe, for which he was knighted. Then, after great success in the for-profit investing arena, Sir Ronald became one of the founders of the impact investing movement.

Sir Ronald argues in favor of “impact measurement” both in the for-profit investing arena and in impact investing (p. 118). He believes that a switch in the world of investing toward impact measurement will transforms for-profit industries as well as the world of philanthropy. Indeed, many large charitable organizations take this tack, making “impact investments” as well as grants to non-profit organizations to help them make a huge difference in the world.

One specific category of investment that Sir Ronald takes up: Social Impact Bonds. As an investor, you can today buy bonds that have a “double bottom line.” The borrower is raising money so they can use the proceeds of the bonds to accomplish social goals. For instance, in the COVID-19 pandemic, a group of leading United States philanthropies, including the Ford Foundation and MacArthur Foundation, raised debt in order to increase their grant-making by more than a billion dollars. These bonds were sold at market rates to investors around the world. Sir Ronald doesn’t use this particular example–he cites the Peterborough SIB from the United Kingdom (p. 124)–but he makes the same case for Social Impact Bonds as a powerful example of impact investing. Through these bonds, you can invest your funds for a market return while also making a good profit for yourself and your family.

Sir Ronald’s argument is that this new kind of investing can change the world and reshape capitalism at a stroke. He argues that it will be a combination of players–from what he calls “new kids on the block” to established charitable foundations (p. 152) to ordinary investors–who will bring about this major change.

Sir Ronald concludes with a call to action: “It is time for us to raise our voices and make an impact through our choices–from how we work, shop and invest, to how we lobby our governments.” (p. 194) Each and every investor has the opportunity to make a difference through their investment choices. You can do well and do good at the same time. Sir Ronald Cohen’s new book Impact is another powerful argument in favor of this important premise.

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