In this podcast, Karim Nurani welcomes venture investors Kai Chen and Diana Adachi of True North Impact Investments to talk about measuring ESG impact investing, how diversity leads to better decisions, cryptocurrencies, digital assets, and the importance of transparency in impact reporting.
In this podcast, we explore five major themes:
Diversity Leads to Better Decisions
In negotiating ESG (Environmental, Social and Corporate Governance) investment commitments, a significant amount of impact value can be left on the table. The policies of True North Impact Investments are focused on identifying how ESG tenets are factored into a company’s decision-making. Diversity at corporate executive and board levels leads to more responsible business strategies throughout the organization. Of particular importance is California’s new AB979 legislation, which mandates minority and diversity representation on large corporate boards by the end of 2021.
Measuring ESG Impact Investing
Some people believe that companies using ESG policies do not provide good financial returns. This is incorrect. It’s important to measure ESG performance and demonstrate the impacts that policies actually have. The equities trading algorithm used by True North tracks 13 technical indicators and balances risk vs return vs impact. For example, the algorithm provides the ability to determine a portfolio’s overall carbon footprint as a fractional ownership percentage of the investment position. Thus, the quarterly carbon footprint of one’s holdings can be compared with that of the overall sector.
Cryptocurrencies and Digital Assets
A primary concern in this field is the level of energy consumption. The location of the blockchain servers and miners is important. Also, SolarCoin offers rewards solar electricity generators with an energy-referenced cryptocurrency, as an incentive to promote energy efficiency. Cambiatus is another global digital assets initiative, where individual leaders’ ESG values and community commitments play key roles in investment decision-making.
Transparency in Impact Reporting
It’s important for progressive companies to be radically transparent in impact reporting. Too often, too many impact reports are written for the environment in-crowd, not the corporate decision-makers and investors. However, ESG company boards are more responsible long-term strategy-minded. and investors will have similar features and are a bit distinct to regular investors. If the board, executives, investors, are aligned on ESG issues, that predicts more stability and, in turn, a more successful business venture.
Corporate Behavioral Analytics
The True North Venture Fund recognizes that ESG-responsible businesses behave differently in the market than their traditional counterparts. The fund uses AI and behavioral analytics to identify promising ventures in the health and wellness sector. In addition to predicting the business impact for each dollar invested, another KPI (key performance indicator) for the fund is the ESG impact for the next incremental dollar invested