Investing in Impact: Lessons from the World Bank to Start-Ups - A Conversation with Monika Kumar

Host Amy Farrell speaks with Monika Kumar, a specialist in impact investing and sustainability reporting.  Monika has dedicated her career to driving sustainability and ESG (environmental, social and governance) into strategy at a range of organizations from start-ups to businesses in New York City to the World Bank Group.  She shares her journey which led her to her role today where she advises private wealth and institutional investors on defining their sustainable investment goals and portfolio reporting.  Throughout the episode, Amy and Monika explore planetary limitations, impact reporting and Monika's entrepreneurial experience with block-printing artisans in India.   Monika provides suggestions on where to start with sustainability reporting and shares valuable insights on  double materiality. 

GRI
TCFD
Donut Economics
Ichcha

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Transcript

Amy

Welcome back to another episode of SolPods Studio. I'm Amy Farrell, based in the Bay Area of California. And I'm delighted to have Monika Kumar join us today. Thanks for joining us, Monika. 

Monika 

Oh, I'm so happy to be here, Amy, and I look forward to having a great conversation with you. 

Amy

So, Monika, I know you're currently working with Impact Arc, an impact investing advisory firm. And in addition to that, you have your very own sustainable textile startup based in New York. So perhaps you can tell us where your sustainability journey began. And, and what really inspired you to advocate for our planet.

Monika 

 I've been at this for quite some time, sustainability has been my passion since I was a teenager. One of the things that's really fueled the path of sustainability in my life has been my ability to go between cultures. So I was privileged to grow up in many different countries, my dad was a diplomat. And so before we came to America, we had already lived on four different continents under four different contexts. So coming, we were coming from Ethiopia at that point, and Ethiopia had just gone through the Civil War, dividing between Ethiopia and Eritrea. And coming from that country, to America, where everything in the stores like you see the variety of things in front of you, you see, a different mindset. That really struck me. And I had the opportunity to go back to India, over one summer with my, with my parents, at that point my relatives lived in a location where the sewage system was still uncovered, like you could basically see, I'm sorry, in advance for giving you this visual, but essentially your waste, human waste, trickling down the sewage system, right next to the path where you're walking. And as a 15 year old, it spoke volumes, right? It told me that we could have a clean environment. But we were on a journey in some other countries to get there. So that summer, actually, I decided I was going to gather the kids in the neighborhood to clean up the neighborhood. And my uncle helped me write the letters in Hindi. I passed them out to some kids in the neighborhood, they were very excited, they signed up, they gave me their phone numbers. I called them up and said, "Hey, do you want to do something this weekend?" Their parents took the phones and said, you keep your American ideas to yourself, don't come here telling us to clean up. So when I came back, I realized I do want to learn how to, one, empower people how to come back and really, basically build an argument for why we need to work on the environment, what we can do to provide solutions, and then get on that path. So that's, that's pretty much how I started and why as you've listed, I tried to find every aspect of my life connected to sustainability, because I do want to build that future. And I want to be part of the solution, rather than waiting for someone else to create that solution for me. 

Amy 

I guess, as you then look to college, were you determined to follow an environmental studies path? Or how did you approach, you know, that level of your education?

Monika 

So I joined the City University in New York, Queens College, and they had an environmental studies program that they were just founding as part of the geology program. So I enrolled in this environmental studies program with a minor in Political Science. And I was told repeatedly by my advisors and teachers that I should select a more science focused subject because Environmental Studies was not a real subject. And now that you look around, you see so many programs on environmental studies and different aspects of environmental studies. Luckily, I went through that. But I continued to, again, be part of the advocacy realm in my undergrad. So I joined with the New York Public Interest Research Group and volunteered through that to do environmental education, environmental advocacy, lobbying. And that again, kept my passion going, despite the fact that I didn't have the backing of some of my official professors. But I gained enough knowledge to know that I continue to want to continue to want to be in this field and will find a path forward and that I did want to touch upon the program that I did in my master's degree, though, was strikingly different. Because for my Masters, I went to the Yale School of Environment, there's a program called industrial ecology. And when I heard about that, I thought that is fantastic, because it really does look at the industrial world we've created, right? So we have all this material that we create. But all of that material has inputs and outputs. And there's got to be a way for us to make it a more circular economy. We talk about circularity right now, but again, this was 20 years ago, where we were talking about an industrial ecology, right? So it's really looking at the industries within the environmental context, but as an ecosystem of its own. And that taught me again, to think about how can you use those resources in the most effective and efficient manner in the limitations of the environment that we exist in. After grad school, I worked in the private sector here in New York, with a very small consulting firm, looking at and advising companies from the outside about how to set up their sustainability strategies, and how to disclose better the information that investors and stakeholders are looking for. And overall, creating a greater awareness and connection amongst the sustainability networks in the city. So it was a very interesting perspective that I, you know, that I brought at that point, because I was looking at, and comparing companies within the same sectors and seeing how they can they can use sustainability as a, as a way to better their business and as a way to create competitive advantage amongst its its peers. 

Amy 

So then, from that experience, how was it that you transitioned, because I know you went on to the World Bank, but how did you think about going from advising small businesses to working for this international organization? 

Monika 

My first interview, which was a face to face interview with the team there, which was a corporate responsibility team, they told me about how much they were doing to ensure that the staff, the World Bank staff that go out into the field, that their impact is maximized. So basically, making sure that the flights that they're taking are measured and offset, so that we minimize the amount of emissions that we're creating in the world as we travel around the world to help our clients. That the buildings within which the staff work –globally, there are over 140 buildings that the World Bank has– those buildings are built to be the most efficient to ensure that we have minimal impact on the natural resources of the environment. So these types of things really caught my attention. And I was intrigued enough to stand up and say, Yes, I will join the team and see how I can help support move the program forward. 

Amy 

That's amazing. So then when you joined, did you have a particular focus, then with a corporate responsibility team? 

Monika 

We had a couple of missions at that point. One was to make sure that our facilities management was kept up to date on the progress of sustainability management within buildings. And so we did, you know, special trainings, we worked with them on on special or specific projects on the ground in different countries to focus on building on incorporating, for example, LEED, which is the Leadership or Energy Environment, Design Program, or any of the any of the comparable certifications in other countries, since we were global. We would help utilize those types of certifications to build an environment and efficiencies within every single building that we put up or we renovated. That was one piece of it. The other piece was disclosing the information that the World Bank was doing. So how could we make sure that our stakeholders, and it's not just the 189 government, finance ministers that sit on the board of the World Bank, but beyond that, it's the citizens. It's the NGOs, it's, you know, the partners that we work with, and the investors, investors who help us raise funds on the capital market, making sure they all understood how the World Bank was setting itself up to be a sustainable organization and how it was living and implementing its mission of reducing poverty and boosting shared prosperity. And a large part of that information was put out through sustainability reporting. And I say reporting, because there are many different aspects and many different standards and frameworks we use to create those reports.

Amy 

Can you tell us, you know, as you think about the different frameworks and the different pieces of information, how did you decide, or how did the World Bank Group decide what to report? And how often to report and how best to communicate through what medium? I'm assuming it's available on the website and other places, but I'm just thinking for our SolPods members who are listening and thinking about reporting, you've done it now with small businesses or corporations, when you worked at the consulting firm in New York, and then you're doing it for a massive international organization. But many of the principles, I guess, are consistent. So perhaps you could just kind of touch on what you view as best practices. 

Monika 

For those who are just starting on the journey, I would say, there's a lot of noise out there right now about the standards and regulations that are being put forward, I would say. And to calm that noise to begin with, the GRI, which used to be known as the Global Reporting Initiative, it's the longest standing standard out there for reporting on sustainability for the multitude of stakeholders, right? So if you're just getting started, I would say and look at that, it's going to be your best friend. Because most of the other standards that are coming on board now have referenced it in some format. And GRI is the one that encompasses the greatest number of stakeholders that you would be reporting to. Most other standards that are out there right now, such as TCFD, which is the Task Force on Climate Disclosures, or any of the regulations that are coming out in, in the EU, or through IFRS, which is the International Financial Reporting Standards. All of those have a specific stakeholder that they reference as the main stakeholder for that report. So that's one of the biggest distinctions you should look at: who do you want to report to, and then use the standard that best applies to you. But GRI would be the one with the broadest stakeholder group. The second piece to look at is what is material to your business? So for example, if you're creating shoes, what is material to your supply chain, to your stakeholders, to your business, is very different than if you are a service organization, you know, providing consulting services. You have a totally different supply chain, a different makeup, and a different impact area. So it's really important to dive into what is most material to your business, and where you're creating the biggest impact. The main conversation that is currently taking place in defining what is impactful looks at two sides of impact. One is what is the impact of the changes that are happening in the climate? Or the resource availability? Or the generational change, population generally, generational change? What is that impact on your business? That's one aspect of materiality. It's called single materiality. So it's like, we're only going to consider whether our business is going to flourish or be negatively impacted due to these changes in the context within which we live. On the other hand, is double materiality, which looks at not only how are these changes going to impact your business, but also how are you as a business going to impact the planet, the people and the economy? And this aspect is the more comprehensive piece because not only do not only do investors– or you and I, when you and I go out there to purchase things–it doesn't only matter to us whether this business is gonna be around for the next 50 years or 100 years, but also, what is the impact that the business is creating? How, how lingering is that going to be? Is it a polluting business that we're supporting? Or is it one that's actually trying to minimize its negative impact and support the communities and so we want to support them because they're doing this lasting impact, right. So we need to know how the changes are going to impact the business but also how the business is going to impact the world within which we live.

Amy 

Tell us then what does make a good sustainability report? 

Monika 

Sure. And I want to start by saying it doesn't need to be a report. It could also be something on the website, it can be commitment statements, it can be videos, there's so many ways we can get the information out there, right? It's all about transparency and disclosure. Are you telling what you're doing? And is it verifiable, right? Can people trust what you're saying? So it can be in any format. But what does make a good sustainability story, let's say, or sustainability disclosure, again, it can be in any format, is one that acknowledges the limitations and the minimum thresholds that we're living within. Let me start with the limitations. We live on one planet, this planet has certain limitations beyond which humans will not exist. And there are studies that have shown that there are seven key criteria of those limitations and climate is one, water is another. And then there are a few others. Biodiversity is another. Within that limitation, we all need to use the resources effectively, so that we can continue to live and have the lifestyle we want. At the same time, we need to make sure that all our fellow citizens have access to electricity, access to water, access to education, access to free speech, you know, there's certain minimum well being elements that we want to make sure that everyone has access to. But we have one planet to achieve it all. And this concept is well framed by Kate Walworth as the “donut economy”. And I love her visual because the outer ring of the donut is the planetary limitations and the inner ring are the wellbeing elements that we need to achieve for every single human being. And the question is,  how is a company or how's a country achieving that? Are you staying within that limit, planetary limitations while providing for all your citizens? Same thing for a company? There's a way to quantify how much emissions you're allowed to have as a company. And what are you doing for societal well being while minimizing your negative environmental impact? And I want to know that all in one story. Yeah, I don't want to go dig out, you know, the data somewhere else, to make sure that I understand what 10% reduction, your Shoe Company means. No, tell me that you understand. And you have a commitment to staying within a 1.5 degree climate, you've measured what those emissions look like, you've started putting a target and a plan to get to that target. And then where along that path are you? Be truthful with me, if you fall down one year or two years, I understand. But as long as you have a governance system in place, as long as you have a strategy in place, where you're verifying, you're still on that path, I will trust you and I will be a loyal customer. That's how I see it. That's the kind of information I want packaged neatly. And very few sustainability standards right now, unfortunately, allow you to do that. There are a few being developed right now. But very few right now would give you that all in one place. And so it's up to the person who's reporting to be able to talk about their governance system, their processes, the targets, and talk about that within the planetary limitations and social wellbeing. 

Amy 

So I want to turn to the work you're doing today around impact investing. I know you're working with an advisory firm, Impact Arc. Can you tell us a little bit how all these experiences you've had, you know, working with companies, advising them on their sustainability reporting, you know, working at the World Bank, working with these different frameworks, how do you apply that on a day to day basis now in your current role with Impact Arc?

Monika 

Impact Arc is making me apply a different perspective to the same problem where I am bringing the system's thinking. So it's, it's about well, how within the context of this changing climate, resource scarcity and population growth, biodiversity loss, within this context, how can we help investors shift their monies to a more sustainable path. And in order to do so, there's got to be transition periods. So how do you help them get to a comfortable place? Where, yes, there's financial returns, but also there's huge impact returns? How do you quantify those impact returns? What does it mean? Again, it comes back to that materiality, right. So if investors are interested in, in investing in IT firms, that's going to be a different material impact and assessing whether or not one company is doing better than the other, that comes back to my knowledge of systems thinking, supply chains, looking at industrial ecology concepts, and assessing from that perspective, one company to the other, which one should you invest in? Same thing with choose, which company has a better supply chain, most supply chains have similar or are essentially the same locations for factories, but then their governance system makes a huge difference, right? Which companies have commitments from the top, have a strategy in place to implement those, those commitments that they have laid out, and have shown and proven that they are already on the journey. So those types of things are being analyzed through Impact Arc, but all for the purpose of shifting the monies towards a more sustainable and or impactful end. =

Amy 

Well, and what's fascinating about your experience is not only are you doing this, you know now from an investor point of view, but previously in working with companies and working with the World Bank, but you're actually applying it to your own business. Tell us about the startup that you launched with your sisters, tell us what you're doing and how you're applying all this amazing knowledge to your own business?

Monika

Yeah, this is the fun conversation. I always enjoy telling people the story of how we got started, because one day, I got a call from my sisters. My older sister did software engineering. And in the 2008 crash, she quit her job and went traveling the world. My younger sister did textile design, and she was finishing her master's degree in London when my older sister went and hung out with her for a little bit. They called me and they said, Monika, we have the best idea of a family business, because we've always wanted to work together on something. I was like alright, great, tell me. They’re like, well, you know, we can work with artisans in India, and work on sustainable textiles. So it would be handblock printed, natural dyes, we're not going to use any chemicals in our production, everything's going to be hand stitched. And we'll work with communities of artisans in India to help support them. And I was like, okay, but what's the most like, what aspects of this is sustainable? And they're like, well, one, there's no chemicals, right? So we're only going to be using plants and metals and so on to create the colors. And second, most of these artisans that we work with, and artisan communities that we work with are diminishing, because of the way that fashion is seen nowadays, there needs to be consistency on how your clothes look. But when you work with artisans, and when you work with hand created items, and when you work, especially with natural dyes, things are not consistent. You know, one color could be very different from the next. So we want to make sure that we can support a community for the long term, and they will believe in the craft and this traditional art form in India will be sustainable for the long term essentially. So I was like this is brilliant, let's do it. It takes all of our all of our passions and puts it together and that's what we wanted to do. We wanted to build a business that not only would help us be happy and thriving, but also the people we work with. We want to make sure that we help the communities we work with do better than where they started and grow with us.

Amy

And tell me a little bit about the craft itself. I know it's block printing based, but given your knowledge and kind of systems thinking maybe you could start literally with the soil I mean from the soil to you know the cotton to the production and then the printing, the block printing, what goes into producing the goods that you guys are making? 

Monika

Let's start with the soil, as you said, a lot of our products and again, we're a small company. So I'll come to the challenges later. But a lot of our products in our small company are made from this organic cotton that is grown in the arid western region of India called Gujarat. It's indigenous to that area. So it's called kala cotton. And we use that cotton. So we partnered with a farm that grows the cotton and then creates cloth out of that cotton. We use that cotton for many of our curtains, many of our curtains, many of our clothing, right now and our tableware, napkins, tablecloth runners and so on. Again, we're minimizing the impact from our cotton. Then the second piece is on the block printing part. So we work with this artisan community in again, the western part of India where they have been doing this for generations. There's one man who basically carves the block that we will be using, and sometimes we use multiple blocks for the same product. But he would carve each one of this by hand, then the artisans who do the actual printing, they will use the mud to cover up pieces of the cloth that don't need the dye, using the block. And then they would dip the cloth in the dye. And some of these vats of dye have been around for many years and decades. And each color vat has to be, you know, precise. So for example, if we need a certain type of blue, we dye it one dip, or we dye it three dips, you know, so it totally changes the color. And then they lay it out flat on the ground. It has to be solar dried by the sun. So if it's raining, and it's monsoon season, there's no work being done. And on the flip side, we work with community women who help us do the stitching and create some of our accessories. So they take some of the waste fabric and create birds out of it or little elephant ornaments, things that we can attach to our accessories, our bags and so on. And make sure that we you know, like we're supporting the community within which these artisans live. But at the same time, we're reusing some of the fabric waste that we've created. So we've really thought about the different elements that go into each of our products, and how do we minimize the waste? How do we reuse if it's possible if there's been a coloring consistency, or if there was some sort of like a mistake done, we try to reprint on it, we refurbish it into a different item. And then make sure that the artists and communities that we work with are really growing with us as our business grows. 

Amy 

So just tell us what your website is and how we can support your business.

Monika

Sure. So our business is called Ichcha, which means a wish. It is our wish for a sustainable planet. And it's a wish that we work with our communities to create that sustainable planet. The website is called Ichcha.com. And, you know, one of the things that we we have done is created Ichcha for Artisans, which basically allows the artisans to come up with their own designs, and produce their own designs, and 100% of any sales of those Icha for Artisans product goes back to the team that created the designs, we only we only take the cost of producing it, but everything else goes back to them, and they share it as a team. So I would suggest people go on online checkout, you know, the products we have, check out what's under the Ichcha for Artisans, and see if you would like to support them directly. But also, we're open for partnerships, we're really, you know, we're keen to understand what boutiques or museums or zoos, you know, what type of prints and patterns people like. But again, these are handblock printed by artisans. And so they're going to be very unique and very different from each other. So we'd like to work with those types of businesses that understand that it's an art. 

Amy

We're coming to the end of our conversation. And for everyone who joins our podcast, we like them to get a little creative and think about their sustainability superpower. So if you could have a sustainability superpower, what would that be and why? 

Monika 

Personally I would love to have the superpower of changing every artifact or every product that we have in front of us like this computer into its elemental pieces. So it can be recycled and perpetuate. But I wouldn't want to be the only one doing it, I would need to create a lot of other people to help me do that because we have a lot of product in this world. 

Amy 

I love that! We have to give that to some of the chemists, the scientists out there. That’s so great. Monika, thank you so much for joining the podcast, it’s been so interesting talking to you about the work that you did as early as 15 years old. Your commitment to sustainability that’s touoched not only companies, international organizations, and then your very own business, which is directly impacting the lives of artisans in rural communities in india. So thank you so much for sharing with us today we really appreciate it. 

Monika 

Amy thank you so much for having me its’ been such a joy talking to you and I look forward to hearing other podcasts from you, they’re all very interesting and I learn so much with every single one of your speakers. 

Amy 

Oh I’m so glad. Thanks again. 

Monika

Thank you, take care.