- Morgan Simon learned that she could impact change in a big way when she was a student in college. Simon compelled Lockheed Martin to change their LGBTQ policies by convincing her college to file a shareholder resolution.
- She has since spent nearly 20 years in impact investing and helped influence about $150 billion invested in the space.
- Simon says impact investing can often fall short or be somewhat misguided. She says, "we're often making decisions from the 30th floor of a high-rise on Wall Street, and not taking our orders from affected communities."
- Simon says investors can start small by simply considering where they bank.
Following is a transcript of the video, which has been edited for clarity.
Sara Silverstein: Over the course of your nearly 20-year career in impact investing, you've helped influence $150 billion in impact investing. Can you tell me what got you interested in this area?
Morgan Simon: I've been a social activist all my life, Sara. And I think like a lot of people who are interested in a number of social issues from housing to food to education, it's really all intertwined and at the end of the day, it has to do with how the economy is structured. So I was excited about social investing as a way of really looking at how we could change the fundamental building blocks of the economy. And I started off as a college student looking at the $400 billion that's managed across the country, filing shareholder resolutions at corporations, like Lockheed Martin, to see about changing their practices for social good, and over time got really interested in impact investing, the more proactive art of saying, let's make sure that we have positive social and environmental impact in every investment that we make.
Silverstein: And you actually did impact change while you were in college, right?
Simon: Absolutely, and as part of a broader coalition of work that has swept the country with regards to gay rights, that we convinced Lockheed to add sexual orientation to their non-discrimination clause, and start giving domestic partnership benefits, and I think it's a great example of that alliance between how do you make profit and value for shareholders while benefiting people that they are integrally aligned. Because if you are a CEO and you tell 10% of your potential employees, "You're not welcome here." Well, that's not good for business, right? So, I think we see time after time that social values help to build stronger corporations.
Silverstein: And this is something that we've been hearing more about lately, the disconnect between "Should companies just focus on making profits?" or "Should they focus more on maximizing other parts for their employees and their customers?" Where do you fall on that?
Simon: I think that we all, as human beings, are about maximizing value at the end of the day, and that value is a number of factors collectively. When I think about the money that I invest or that I save, and I'm thinking about what I'm gonna tell my grandchildren in 40 years, which is "I created this wealth for you so that you could have opportunities in life." But I don't wanna say that I hurt other people in order to create it. I think that that is a major value that people care about in how we think about supporting our families and our communities of making sure we that generate wealth in ways that we can really be proud of.
Silverstein: And you've been in impact investing for a long time, what sorts of things have you learned, or noticed, or what do we need to improve on?
Simon: So one of the things that I'm very proud of, in terms of impact investing over this last decade, we've proved that it's market rate, where we've proved you can do it across asset classes, right? That it's really easy to implement, whether you have a hundred dollars or a hundred million, there's opportunities for you. I think the challenge that we have for the next decade is to make sure that the impact is real. That when you think even of the definition of the word impact, Merriam Webster would say, "to impinge upon, especially forcefully." And that doesn't always sound good. That it's up to us, as imperfect human beings, to figure out if that impact is going to be positive or negative, and that's where I think we need to put in the work over this next decade.
Silverstein: And how do you figure that out when you're looking at impact investing, where it's supposed to be positive, the impact is supposed to be positive, how do you look at it or when does it get misaligned?
Simon: So I'm also co-founder of a non-profit called Transform Finance, which abides by three principles in its work to bridge finance and social justice. And we really look a lot at how do you add more value than you extract. To make sure we're not just making people a little better off but focusing on fairness. And that's often where we've gotten it wrong, and starting off with something that is positive but stopping short at something that would really change the structure of the economy. The second is that we're often making decisions from the 30th floor of a high-rise on Wall Street, and not taking our orders from affected communities, to really make sure that we're benefiting people in the way that they want, and not just in the way that we think the world should be.
Silverstein: How important is diversity in that, in the people that are making these investment decisions and at the tops of these companies?
Simon: I think diversity is critical from two perspectives. One is that in any organization it just leads to better decision making. When you look at global assets under management, less than 1% are managed by firms owned by women or by people of color. "Or," which is really incredible. And what investors are losing is diversity of perspective, right? Of knowing that the pattern recognition that I might have is going to be different than a male investor, and when you put the two of us together, right, then we're covering 100% of opportunity out there. And then the second is when we think about going back to how do you make sure that things aren't just a little bit better but actually fair, is to look at the roots of structural inequality in this country. Recently, The Boston Globe had put out this series of articles on the average net worth between black and white families. White families in Boston having over $200,000 of net worth, and black families having an average of $8. So when we look at opportunities to support job creation, it's great to create jobs, it's great to create higher paying jobs, but if we don't start looking at the distribution of assets, and that means looking at who is going to profit when corporations do well, it can't just be the same group of investors and founders. How do we make sure we're really diversifying the founder base, and then supporting companies that are very thoughtful about distributing benefit across multiple people?
Silverstein: And what advice do you have for people who do want to get involved in this movement and want to make a difference, but are skeptical and don't know where to start?
Simon: So in the book, "Real Impact: The New Economics of Social Change," I offer four steps for an ick-free life. The idea that ick being the feeling of not knowing where your money spends the night. And the first is to really look at where you bank. That's one of the easiest steps to make sure you're getting the exact same services and financial return, but can do it in a way where you know that your money is supporting the environment, or worker's rights, or other values that you may hold. And then the second is to look at your retirement options. It may mean talking to your employer about, is it possible to add a social option? You know, things where you can really check the box and be able to go on your way. These are easy starting places, but then coupled with the fact that we need to continue to be conscious consumers of impact investment to really hold financial institutions accountable to being accountable to affected communities.
Silverstein: What do you think people get most wrong about impact investing?
Simon: I think - I think what we often do as impact investors is we focus on the what instead of the how. The what being, we say, well if it's microfinance, or it's food, or it's farming, or it's forest-related, then it must be positive because those are things that are always positive, right? And then we forget that you have to really pay attention to the how. Did we do it in a way that was non-extractive? Did we make sure that the people we say are the beneficiaries also got to be the protagonists that we're engaging in communities in design, governance, and ownership, not just as being the consumers, right, or the workers in a transaction? So these are some of the pieces where, if we focus not just on what the industry is, but how that industry is working, we can really get to greater levels of structural change.