Much of the Campbells Fund Focus 2018 conference featured panelists discussing how changing regulations, technology, and political issues could impact the bottom line of the fund industry.
But one speaker, attorney Elizabeth Renieris, spoke about how institutions can profit while also promoting the cause of social justice.
Renieris’s speech was on “social impact investing,” which she defined as investments aimed towards generating positive environmental and social effects while also making positive financial returns.
The term “social impact investing” was coined about a decade ago, and has become increasingly popular within the last several years. Social impact investing is different than the decades-old idea of corporate social responsibility in that the latter focuses on doing no harm to society, while the former focuses on making tangible, positive results, said Renieris.
However, social impact investing has several barriers to being fully effective, said Renieris, who serves as the global policy counsel to Evernym Inc., a startup focused on building commercial products and services for individuals and enterprises that enable a new form of digital identity.
She said the lack or high cost of trustworthy data on the social or environmental results of an investment makes credible accounting of impacts difficult.
She also said there are challenges around the attribution of an impact – meaning the allocation of an impact-related claim to an investor. For instance, it may be hard to attribute a positive effect of an investment is made years before the impact is felt.
Further, Renieris said there are roadblocks in monetizing social impact investment. Roadblocks include uncertain returns, high transaction costs and “illiquid impact markets,” she said.
Renieris said that, luckily, there is a technology that helps address these barriers: blockchain.
“Blockchain projects have real opportunities for impact that may not have been possible in the past,” she said.
Blockchain – which is basically a decentralized, digital ledger – has the potential to boost social impact investing by increasing transparency and trust within the infant industry, she said.
Renieris provided several examples of what she said are successful projects carried out using blockchain technology.
One such project is the Bounties Network, which is a blockchain-based platform where people can either offer payments for work they need done, or work on projects listed on the network.
Recently, Renieris said the Bounties Network partnered with the nonprofit organization Code to Inspire to work with girls in Afghanistan. The females would work on software problems listed on the network, and in turn would be paid $10-$80 in Ether – a cryptocurrency – each time they solved a problem.
“This represents a small but significant step towards financial independence in the region,” said Renieris.
Another project she cited as successful was “Bounties for the Ocean,” which gave people a crypto-coin called “Dive Points” for cleaning plastic out of the waters.
The initiative would give someone 10 Dive Points every time they posted a time-stamped picture of them with the plastic they cleaned out of the sea, said Renieris.
More generally, she said, blockchain technology can assist in providing financing to small- and medium-sized enterprises in developing countries. These businesses often have the most difficulty obtaining financing for multiple reasons, including their high credit-risk and a lack of developed property rights to use as collateral.
Small- and medium-sized business owners can obtain “microfinancing” by conducting transactions on a blockchain because it allows banks, accountants, regulators and others to verify the veracity of their business and the correctness of the businesses’ data, said Renieris.
“Participants can build up a history of transactions that prove credit-worthiness,” she said, deeming the process as “risk reduction through transparency.”
Renieris said the most important social problem that can be solved by blockchain is verifying a person’s identify. More than one billion people don’t have verified identities, including people from failed states and those who have had their documents destroyed in war-torn areas and other places, she said.
Renieris said there’s an organization called iRespond that is helping Syrian refugees and others obtain identities on a blockchain – called a “biometric private key” – that will allow them to travel, vote and exercise other fundamental rights.
The attorney explained that while blockchain tech has the potential to assist in solving many social ills, its effectiveness will come down to the people using it. She lamented that blockchain technology was invented by idealists, but has since been assimilated in the existing “world order.”
“As with Bitcoin, many early blockchain projects were meant to challenge existing institutions, structures, and fundamental assumptions about our existing financial institutions, but also about the world order at large,” she said. “They were about disrupting and democratizing everything.”
This is “why I’m skeptical,” she said. “But I’m also optimistic in talking to this audience. While it’s inevitable that institutional money will come into play, the real impact of this technology will depend on whose money is behind it and where this money is invested.”
According to her biography, Renieris holds an A.B. from Harvard University, graduated on the Dean’s List from Vanderbilt Law School, and obtained an LLM from the London School of Economics, where she earned distinction for her dissertation on media and the law.
“Elizabeth advises Evernym on both foreign and domestic legal and policy challenges, particularly as they relate to digital and self-sovereign identity (SSI), blockchain and DLT, trust and accountability frameworks, and data protection and privacy matters,” states her bio on the Campbells Fund Focus website. “Elizabeth is particularly focused on reaching a ‘new deal on data’ that is user-centric, user-controlled, and privacy-enhancing.”