Rodney Gollo: The intersection of blended finance, engagement and natural capital
This week, our TTI Interview Series covers our member Rodney Gollo. Rodney specialises in emerging and frontier markets and has international experience working in healthcare, insurance, consultancy and social enterprises. He has a particular interest in environmental, social and governance (ESG), blended finance, impact investing and the megatrends shaping the global economy, businesses and societies. He serves on the judging panel for the Better Society Awards, which awards companies helping create a better, more equal, ethical and sustainable world.
In this interview, Rodney calls for diversity in the impact investing space and collective solutions to complex challenges. He also talks about importance and intersection of blended finance, engagement, and natural capital.
Impact and risk management
Rodney, tell us a little about your work and how it intersects with the impact space.
My work focuses on risk management, which I would simply define as helping organisations and stakeholders navigate complexity and uncertainty in order to achieve a desired outcome. This at times involves communicating complex matters in a simple way, such that people can make better informed decisions, and or - have a lens through which to understand something. The impact space continues to rapidly evolve and can feel complex. When you’re trying to understand the type of impact you want to achieve (e.g. financial or non-financial), how best to achieve it (via monetary or social outcomes) and who you want to achieve it for - I think risk management is key.
Put another way, screening an investment portfolio for environmental, social and governance (ESG) factors is a form of risk management. ESG factors can act as an indicator enabling an investor to better predict how uncertain the future performance of a portfolio might be - allowing them to make more informed decisions. There is a growing appreciation that the uncertainty associated with non-financial factors can have just as large, if not greater impacts than purely financial ones.
Addressing the needs of people as impact
What would you say is your own definition of “impact”?
Ultimately I would define impact based on listening to the needs of the people for who a problem is being addressed, or a positive outcome is being achieved. Whatever this happens to be is how I would define impact.
Collective solutions within the impact space
Based on your experience, what is the important issue to be solved over the next 10 years?
Pandemics have been associated with being significant accelerators of a range of factors/trends. Covid-19 has been no different. It however has further demonstrated the interconnectedness of our current world and its increasing complexity. In that sense, I believe one of the most important issues to solve over the next 10 years is how to collectively solve increasingly complex challenges, and adapt to situations of uncertainty. This could be one way to help address any multitude of important issues existing today, and address unknown issues in the future.
What do you think are some of the biggest challenges in the impact space (standing in the way of providing solutions faster)?
This question is something I discussed in a recent podcast I was on covering impact investing, ESG and risk management, which you can find here and here.
Impact investing, blended finance, engagement, and natural capital
Rodney, please share the long-term vision you have for your work and how you measure & quantify your impact?
I’m optimistic about impact investing and what the broader sustainable finance space can achieve. I’m particularly interested in the intersection of three areas/factors. Blended finance: this is a structuring approach which seeks to use capital from public/philanthropic sources to increase private sector investment in sustainable development. Impact investing can play a key role in facilitating blended finance transactions. Engagement/Stewardship - numerous organisations and stakeholders are going to require different styles and levels of engagement in order to deliver the type of positive impacts sustainable finance approaches seek to deliver. Given the speed with which the sustainable finance space is growing, it will be important to ensure engagement is targeted and meets the needs of different parties. Natural capital - just as the economic, investment and political landscape is adapting to focus increasingly more attention on certain non-financial (i.e. ESG) considerations. Natural capital is a way of thinking about nature as if it were a stock that provides a flow of benefits to people and the economy. i.e. consisting of natural capital assets – such as water, forests and clean air. A better understanding of the natural capital risks will help in better tackling issues ranging from climate change to biodiversity loss. How these areas intersect, and the role they play in how impact is measured/quantified will be of interest over the short, medium and long term.
Diversity in the impact investing space
What misconceptions have you noticed regarding what “impact” is all about?
The primary misconception I’ve observed is that the impact space is purely for those with a financial or investment background. As mentioned earlier, impact can be of a financial and, or non-financial nature. Similarly, those with an interest or desire to be involved in the impact space can, and should come from all backgrounds and skill-sets. The more diverse the universe of skills and insights within the impact space, the greater the likelihood of achieving the positive outcomes the field aims to achieve.
I think and hope the increased attention and growth of the industry will increase its accessibility.
