Challenges of Biblical Proportions and Key Sectors
ClearlySo Founder & CEO, Rod Schwartz shares his reflections on the current pandemic, its effects on different sectors and the role impact investing can play in helping support wider society and the economy.
I have not blogged in over a year—I have no idea why not—I guess “things have been busy” (a perennial refrain).
Although things are no less busy now, this feels like a time when writing and reflecting are absolutely essential. As some of you know, I have a religious background and can’t help but relate recent times to the 10 plagues mentioned in Genesis. Without wishing to comment on the historical truth of whether or not these plagues took place, recent times do feel biblical in proportion. The flooding which took place in the UK a few months ago has no biblical counterpart, however, and I’m not sure to which category of plague to put the recent devastation of southern European olive trees caused by disease, but by my reckoning we have already had three other calamities of Old Testament proportion:
The third is obviously the most serious and has changed our lives and our futures utterly. Never before in my lifetime, and I am 62 years of age, has something of this all-encompassing, global scale confronted us. One feels helpless and even sometimes hopeless—but this does not feel the right response, and certainly not the answer for those of us involved in galvanising capital to achieve social good. And this is what impact investing is really all about.
It is hard to imagine that what we do has ever been more self-evidently important than it is today. At ClearlySo, which is the impact investment bank for which I work, we have decided that rather than wring our hands, or stare at screens, (although we do these things too) this is the moment for us to be reaching out to our clients (both investors and investees), and seeing how we can help them do what they do and do it better, faster and in greater volume. Thus far it seems to be working. Since the lockdown, we have been able to assist our clients in closing four distinct transactions, all in different economic sectors. For three of these, we are able to disclose their names and what they do:
- Oddbox – sustainable fruit and vegetable delivery
- Zeigo – which gives companies access to renewable energy
- Bibliu – a digital learning platform that makes textbooks and reading materials more accessible
- A Health Tech company offering doctor visits face-to-face and via video
What seems especially interesting to me is how these fundraises seem to foreshadow much of what I believe the world of tomorrow will look like. Some areas of the economy will inevitably suffer, and the wrenching nature of these changes will create hardship and tragedy for many. Governments will rightly be measured based on how they enable their citizens to adapt to this cataclysmically rapid shift in economic activity. However, there are 4 or 5 sectors which I think will be receiving a great deal more attention in the new economy, which will manifest very different national priorities. These include:
- Healthcare— this sector, especially at the non-physical and virtual and of the spectrum, will see a transformation that has already begun dramatically. Obviously, any company or companies which can deliver products and services to deal directly with the coronavirus will be substantial beneficiaries of this environment. But on an ongoing basis, investors will be focusing attention on the different ways we are likely to deal with health going forward.
ClearySo healthcare sector lead Carl Bergholtz has discussed this in his just-published blog: Digital Health – Shifting into Hyperdrive
- Education— in the short-term companies which offer online alternatives have been prospering, as in the case of Bibliu, mentioned above. I believe that the epidemic will accelerate the longer-term trends already underway in this economic sector.
ClearlySo education sector lead Chris Parsons has touched on this in his most recent blog: Impact Investing – Education & Training Sector Insights
- Environment and renewable energy— few will have missed the widespread reports regarding how the economic slowdown has improved the air we breathe. Although industrial activity will rebound and some of the progress achieved will be reversed, I believe the clamour will grow for more sustainable and renewable sources of energy and a generally less wasteful society. The floods in the UK and the wildfires in Australia are definitely believed by many to be caused by environmental degradation. The risk of these events cannot be reduced to zero but there is a growing sense that environmental action will reduce their frequency.
- Food and agriculture–this gets less attention than some of the sectors above, but in the world of rapidly changing priorities attention is now being focused on how technology can improve the productivity and sustainability of the systems which keep us fed and watered. The applications of technology to this area is booming and the breakthroughs are not only exciting, but essential.
The recent successful raise we helped Oddbox complete delivers real results in this area: Investment Summary – Oddbox March 2020
- Ethical and responsible consumerism– after this crisis ends modern societies will continue to consume. One can even imagine a burst of activity as a result of pent-up demand. However, one can also imagine, in a continuing shift of priorities, that such consumption will take place in a way that is more sustainable, ethical and responsible. Such a filter can be applied to pretty much all areas of our consuming behaviour. In particular, some areas of consumption will grow particularly rapidly, where ethical and social considerations overlap with health and environmental issues.
ClearlySo responsible consumerism sector lead Letty Wheeler has written precisely about this subject in a recent report: ClearlySo Report on Responsible Consumer Market
You can also hear her discuss the sector considering the current COVID-19 pandemic: VLOG: Responsible Consumerism Round-Up March 2020
If all this sounds like subjective cheerleading, rather than objective analysis, so be it. I believe that what I’ve written above is actually both. It is true that I do look hopefully towards a world where an increasing percentage of the $85 trillion in professionally managed assets is invested in a way which benefits society. Right now, less than 1% of that pool seeks to do so. I also believe that investors who get ahead of these likely shifts in international priorities are going to do extremely well, and many of these opportunities lie in the five sectors I have mentioned above.
This is the challenge for those of us involved in impact investing.