Investing for Positive Impact: A Conversation with Jennifer Leonard

In this episode, we hear from Jennifer Leonard, Head of Impact at Ethic, about what it really means to invest with purpose. She explains how financial systems can support positive change and why impact investing is more than just a buzzword. Jennifer also offers advice for students who are new to the world of finance but want to align their money with their values. If you’re curious about ethical investing, sustainable business, or just figuring out how to make your future career count for good—this one’s for you.

To learn more about microfinance, check out Accion, Grameen Bank, and Women's World Banking.

Check out the SolPods Website: www.solpods.org
Follow us on Instagram: @solpods.earth
Follow us on Linkedin
Follow us on YouTube

For questions, email us at: hello@solpods.org 

Transcript

Opening

Welcome to SolPods studio. We're not your average social network. We're a community of professionals, enthusiasts and students taking sustainability to the next level. Join us on our journey and get inspired by Earth heroes just like you.

Amy:  00:19
 
Welcome back to another episode of SolPods Studio. I'm Amy Farrell, and I'm joining from the Bay Area of California. Today I'm here with Jennifer Leonard, who's joining us from New York City. Jennifer has an impact investing background and she's worked with many different types of investors over the years to help them align their values with their financial goals.

She's currently a managing director with New York City-based Flat World Partners, an impact investing consulting firm. Prior to that, she was a chief investment officer with Syntrinsic Investment Council, and Syntrinsic is an investment firm that works with nonprofits and other mission-led individuals. Previously, Jennifer had worked in impact investing with Cornerstone Capital and also with The CapRock Group. At the very beginning of her career, she actually did equity research with Morgan Stanley and Merrill Lynch, and finally, she also spent some time in microfinance, which I'm really excited to hear more about.

Thank you so much, Jennifer, for joining us today. We're excited to jump right into a conversation.

Jennifer: 01:39 

Thank you, Amy. It's great to be here.

Amy: 01:42 

Fantastic. Let's just kick it right off. Your career really started in what I would call traditional financial services, but at some point, you made a pivot to impact investing. Can you tell us what brought about that change?

Jennifer:  01:59 

Sure. After business school, I went to work in equity research, and I was covering the telecom sector. One day, I was reading the Wall Street Journal, and on the front page, there had been a series of articles about Muhammad Yunus and microfinance. I remember thinking at the time, "This is really interesting. It's using business tools and frameworks to promote economic development." I was really intrigued by it.

A couple of years later, I decided to go to India where microfinance was taking off. I was fortunate to get a fellowship from the American India Foundation with a leading microlending organization. Microfinance, just to level set the discussion, in its most traditional form, which is what I was doing in India, is the provision of small loans to women so that they can start income-generating businesses. There are different models of microfinance, and that sector has expanded greatly to encompass a range of products beyond the traditional lending model. But I was working in the more traditional "group lending" model when I was in India.

Amy: 03:11 

Fantastic. It sounds as if you went over to India driven by this passion, and it led you to incorporate this type of impact-related investment solution or using finance to achieve better outcomes for individuals. That then was further integrated into your career when you turned back to New York. How did you transition back into New York City and the capital markets on Wall Street?

Jennifer: 03:43 

Coming back from India after four years, I wanted to continue working with women in microfinance, but I wanted to broaden my knowledge beyond just India. So I went to work with an organization that was focused on women in microfinance, which had a global reach and expertise across the microcredit spectrum. That was a good next step for me.

I eventually did return to Wall Street for a bit, but I remained passionate about investing in impactful entities, notably those that help women. So I was compelled to return to the impact investing space. One area that became more important to me during my time in microfinance was the importance of financial literacy, which sadly, I think a lot of people still lack.

Amy: 04:29 

Definitely. Since you had been working with women in India and then you were broadening your scope, did you find that there were gaps in knowledge globally? And how do you think people can implement tools to bridge those gaps?

Jennifer: 04:48 

There are definitely different levels of knowledge in the sector globally. What I found when I was in India was that there were certain areas that were much further along in terms of the development of microfinance. Specifically, when I think back, Latin America had a much more developed microfinance market than what the Indian market was at the time. And certainly, Muhammad Yunus and Grameen had developed a pretty robust model out of Bangladesh.

I think there was a lot of room for growth, and more than anything, there was room for cross-pollination of ideas. You could see an idea that had taken shape in one region be transported over to other regions where there was a lot of learning to be done and shared.

Amy: 05:50 

I guess you then took that experience and really transferred it to working with individuals, including investors, on impact investing. Can you tell us a little bit about that turn in your career?

Jennifer: 06:03 

Sure. Going to work with the broader impact investing space. Because initially I was just doing micro-lending.  Initially started in microfinance, impact investing was pretty much just microfinance and clean tech. It has really morphed into its own industry that covers a lot of different thematic areas and really reaches all asset classes at this point. It's been really exciting to see that growth.

I've been lucky to work with both institutions and individuals, and different forms of institutions from foundations to large family offices. It's been really interesting to learn how different organizations approach their portfolio decisions around impact investing, and to see people on their journey going from just learning about impact to potentially fully engaging their portfolio with an impact lens.

Amy: 07:16

If we could stop right there and just talk about some of those experiences, without naming any names.  Were there any particular client relationships you had where it really surprised you, and they were so excited to link their values with that impact investment?

Jennifer: 07:32 

Definitely. One area that's been great to see growth in is the foundation space, and specifically foundations and nonprofits that are looking to mission-align the impact side of their business with their grant-making. That's been really exciting. I think you've been seeing that a lot more in recent years. It's become much more popular where foundations and nonprofits are going "all-in" on impact and looking for either full alignment or the majority of their assets being aligned with their mission.

Amy: 08:13 

As others are following suit, maybe you could talk about the evolution of how impact investing can be applied to different types of asset classes. Because in order to have that all-in approach, you really need to be able to measure the impact on society and the environment across all of your holdings.  So, can you talk to us, just very high level, about that evolution?

Jennifer: 08:39 

Impact investing now spans pretty much every asset class, notably across the private space where I think there's a lot of room for impact generation. This is probably a good place to talk about definitions of impact investing because there are a lot of different definitions out there, and I think everybody approaches it their own way.

My personal view is that all investments create impact, and it can be positive or negative. But to create positive impact and to be an impact investment, there really has to be impact generation built into the business model, into the actual framework of the business. So as the business grows, the impact will grow with it. That's sort of what I like to look for when I'm looking for investments with impact.

You can find this across the private investing space - venture, private equity, real assets, real estate, and private credit. There's also the ability to invest with impact in public markets through both thematic funds that are focused on specific impactful areas, such as clean tech, or to invest in funds that have a very heavy focus on shareholder engagement and working with the companies they're buying stock in to affect positive change.

So, I think there's a couple of different ways that you can work with target companies and target funds to assess the impact.  One thing in the space that we have seen is that there's been a wide proliferation of frameworks and approaches to measuring impact.  Sometimes it can sometimes be a little bit daunting just because there's so many, it seems that there's so many different ways of measurement. But ultimately, it's important to look for positive outcomes that the impact is generating and measure those using some sort of framework. One example of a framework that has been used is the Impact Management Project framework, which looks to assess impact across five areas and really does a great job trying to quantify the impact created across those.  So, I think there's a lot of room here for investing across asset classes using impact, and I think there's a lot of room for frameworks to apply to the different investments as well.

Amy: 11:43 

Definitely. Let's hope that some of those trends evolve. Turning back to young people again.  You started at Merrill Lynch and Morgan Stanley.  You got your CFA.  You did your MBA at Wharton. Do you recommend that young people pursue degrees in finance, or how can people who want to have a role like yours working in impact investing.  What are the different routes or paths that you would recommend that they pursue?

Jennifer:  12:17 

In terms of courses in school, now you can get an MBA with a sustainability focus or, in certain cases, an impact investing focus, which I think is amazing. To move into impact investing, it's really important that you have a good balance of both impact and sustainability knowledge, but also traditional financial knowledge as well.

I would recommend looking for a mixed course offering where someone has taken some courses in sustainability and impact investing, but has also taken more traditional courses like corporate finance, maybe some courses about investment management or structuring investments, depending on what area of the business they want to get into. If you can find a balance between the two, that's probably a good way to go.

Amy: 13:15 

This is fabulous. I so appreciate you walking us through your journey. It's so interesting, especially because you have literally touched every asset class through the lens, whether it's as a CIO or working as an advisor with clients and investors.

Now I want to turn to a kind of fun question. So you have not be creative.  Put on your creative hat.  We ask everyone who joins us: If you had, what we would call a "sustainability superpower" - some imaginary superpower that you suddenly got that would change the world for the better, what would that superpower be and why?

Jennifer: 14:00

That's a good question. My sustainability superpower would be something that combines access to education and financial services, including insurance, savings, and credit, for all people. I think the combination of these two particular factors is very powerful in terms of achieving development goals and in terms of just being able to increase your career prospects and your livelihood, basically. So I would really try to.  My superpower would be to combine those two effectively and leverage that for the population.

Amy: 14:48 

Well, I hope we can at least get it going on SolPods. We are focused on education and sharing sustainability knowledge amongst the members. But I think if there was some way to snap your fingers and make sure that everyone had access to that information, it would certainly be helpful.

Well, thank you so much, Jennifer, for joining us today. Loved hearing about your journey and your recommendations for young people who are looking to get into impact investing.

Jennifer: 15:19

It was my pleasure. Thank you for having me.

Closing: 15:24

SolPods Studio is made possible by listeners like you. Join the free SolPods platform to become a part of our virtual community of changemakers. links to our social media, website and platform can be found below in the show notes. If you enjoyed the show, feel free to rate and review our podcast. Thank you for listening and for your support.