Impact: Reshaping capitalism to drive real change — Sir Ronnie Cohen interview

Alexandra Mousavizadeh
11 min readJul 10, 2020


“There are lots of books that talk about diagnosing our problems, but not many that offer concrete solutions. I wrote this book because there’s a solution within our grasp.”

Over the past few decades impact investing has shifted from being mainly the preserve of environmentalists and leftist politicians to a concept that is now very much part of the mainstream.

At this years Davos, for example, so many of the conversations were around the potential ways that enterprises, governments and individuals could leverage their time and capital to make positive changes to the planet.

One person who has been advocating impact investing for many years now and has played a key role in its increasing adoption in western capitalists countries is Sir Ronnie Cohen.

As far back as 2000, Sir Ronnie, who already had a distinguished career in banking and venture capital, became Chairman of the Social Investment Task Force (SITF). Since then he has been a powerful and consistent advocate for harnessing capital to not just create wealth, but also improve outcomes in the lives of individuals and for society as a whole.

Now Sir Ronnie has crystallised ideas that have been percolating for decades into a new book, ‘Impact: Reshaping capitalism to drive real change,’ which looks set to become one of the definitive tomes on the topic.

In the book Sir Ronnie argues that while capitalism and democracy are being challenged, traditional ways of fixing systems and infrastructures simply aren’t fit for purpose any more. A path to a new world where inequality is shrinking, where natural resources are regenerated, and people can benefit from shared prosperity is what is required — and this is the concept that Sir Ronnie calls the’ Impact Revolution.’

The book has already received some very high profile recommendations. Kristalina Georgieva, Managing Director, International Monetary Fund, Former CEO, World Bank Group described it as ‘A fascinating blueprint for a hope-filled future underpinned by the social power of impact investing.’

Meanwhile U2’s lead singer Bono, who has developed his own social impact driven vehicle in the Rise Fund said ‘Capitalism isn’t immoral, it’s amoral — it’s a wild beast that needs to be led. Here Sir Ronnie provides the core operating manual for those seeking to do good while also doing well.’

At Tortoise, the way in which enterprises focus on responsible and sustainable business practices has become a central part of our Intelligence output. We recently released the June quarterly update of our Responsibility 100 Index, a ranking of the FTSE 100 companies on their contribution towards the UN Sustainable Development Goals, measuring their commitment to key social, environmental and ethical objectives such as carbon reduction, gender equality and good business practices.

In my interview Sir Ronnie he talks about some of the concepts in his book, which are also concentrating the minds of business leaders of companies at the top of our index, and explains why they are even more relevant in a post-Covid19 society than when he wrote them last year.

He also discusses educating the investment community and whether we are approaching a tipping point in which impact evaluation becomes central to business decision making

What was your reason for writing ‘Impact: Reshaping capitalism to drive real change’?

The world faces many problems, both environmental and social. And despite there being a lot of books out there that talk about diagnosing problems, there are not that many offering concrete solutions. And so the purpose of this book is to offer a solution.

I was born in Egypt, came to the UK as a refugee at the age of 11 and was fortunate enough to be given a break to study at Oxford. I then received a scholarship to study at Harvard Business School. And so I have a very personal human motivation to enable other people to have the same opportunities as I have had.

This was part of the reason I went into venture capital which I thought would create jobs to help the economy. And even though it did create jobs I became aware of a certain amount of disparity in society and how the gap between rich and poor was increasing. There needed to be another solution, and that put me on the path to impact investing.

We need to find a way of introducing impact entrepreneurs, whether profit or nonprofit, to the capital markets and connecting them to investment.

A couple of years ago you mentioned that ‘the conversation around impact investment or impact creation is becoming mainstream.’ Can you talk a bit about what you mean by mainstream and if you think its evolving the way you had envisioned? And who or what do you see as the catalyst that is driving change?

There has been a change in values among younger consumers, and that is putting pressure on all the other stakeholders within the impact revolution.

I don’t want to say that Millennials are necessarily different from previous generations, but as a generation they represent values of equality, justice and environmental concern a lot more strongly.

What they want, and indeed what they expect, is significant and irrevocable change. And we as consumers, citizens, voters, pension savers can play a part in engineering that shift.

It is not straightforward. Some big businesses are jumping on the impact bandwagon, but without necessarily creating meaningful change. Yet at least it’s a signifier that there is momentum and investors are aware of the shift in consumer behaviour and consumer values, and in turn they’re putting pressure on the businesses in which they invest to make that shift. So it’s an interconnected web of different forces that are combining to bring about this conversation about impact investing and the way we work and the way we live.

You have mentioned in the past that you remain optimistic that the world will meet at least some of the SDGs by their 2030 deadline. Would you say you are an optimistic person, generally and specifically when it comes to the potential of impact investing?

I am, I think you have to have a certain amount of optimism to have the strength of conviction to continue on this journey of pushing the impact revolution. I’m sure there’s a lot of voices that are against it. Also trying to change a system is a pretty ambitious goal.

Hopefully the book reflects my optimism. There is a solution within our grasp, it’s not all doom, there is a way forward. We have all the pieces of the puzzle to be able to put the puzzle together. And the glue for this new puzzle is the measurement of companies’ impacts on the basis of standardised impact weighted accounts that are audited and mandated for.

Covid19 has exposed some of the fault-lines in our societies. In the light of these changes is impact investing more important than ever? Has the pandemic made you reconsider anything that you wrote in your book?

The COVID-19 crisis has shaken our belief system. Because of this it’s an ideal time to release this book and specifically this message because people are starting to think about things differently.

We’re being challenged in a way we haven’t been before, also collectively, not just individually.

The fault lines in our societies have been exposed by the pandemic. It is widening the inequality gap, both within nations, and between developed and developing countries. Further, the lack of capacity governments will have to support public services, given the large debt undertaking most of them have opted for, makes impact investing perhaps more important than ever.

With more constrained budgets the most vulnerable will suffer. Whether it’s single parent families in marginalised communities, excluded homeless people or people from poorer nations, unless we act they will suffer.

To be fair I am impressed by the way that a lot of western governments have developed stimulus packages. The issue is, however, that the stimulus packages inevitably are tailored towards big businesses basically to try and keep them afloat.

So, even though there might be a rationale behind this approach in trying to keep the greatest number of people in work, my fear is that it still means that the rich get richer and the poor get poorer. The inequality will increase.

Impact investing and impact investing tools are more important than ever now and in my book the chapter on government includes examples of the tools that governments could and should utilise now to maximise the effectiveness of their(?) expenditure. Generally I advocate a focus on outcomes rather than inputs ,and also more importantly, to bring the private sector on board to work alongside governments. I want us to harness the innovation, resources and capital within the private sector to help all of us recover from this crisis.

The worst thing would be that the recovery meant going back to business as usual.

To give you an example I think there are parallels between the 1929 Wall Street Crash and what is happening now. After the 1929 crisis people were asking how did we invest in companies without being able to fully measure and understand their profit?

And now after the COVID19 crisis, people should be asking themselves, how are we not doing the same for impact, measuring and understanding the true impact of companies.

How central do you think measurement is to the future of impact investing?

Working out measurement systems for the financial world took a long time, but there was a tipping point when it wasn’t necessarily perfect, but it was good enough.

And with impact investing we are at that stage now. We’ve been talking about measuring impact and setting up the frameworks, and now we are at the tipping point when impact measurement will become mainstream just like in the early 1930s, where profit measurement became mainstream.

People often say to me ‘you can’t really measure impact. It’s so hard it’s so fiddly etc etc etc.’ And I always say that actually impact is a lot easier to measure than risk and today we have the technology and the resources to do so.

We take measurement of risk for granted, it’s almost as if there wasn’t even a time before the measurement of risk. Yet actually, creating a system was a process that was constantly being refined. It didn’t have to be perfect straight up, as it will obviously improve over time. Even with risk the system we have today is imperfect and also to a certain extent, requires judgments.

The same is now true for measuring impact investment. And even if it’s not perfect right now, we need to take that first step in that journey. And that is the biggest call to action in the book. I want governments within the next two years to mandate for impact-weighted accounts, as I believe that is the key to unlocking the world of impact economies, which I define as a world in which business, investment, consumption and employment decisions are based on risk, return AND IMPACT.’

The seismic shift in tech is another potential pressure on inequality but is also being touted as the way to solve many of the worlds sustainability and responsibility issues. Do you think more impact money should be earmarked for tech projects?

In terms of startups and entrepreneurs, I think impact entrepreneurship will be the hallmark of the rising generation. It will become a kind of dirty language to say ‘I’m only in it to make money.’ Startups will be expected to offer more, namely some degree of impact and social change as part of their business goals.

In my book I talk about Tesla and the way it is challenging the automobile industry, in terms of trying to reduce fossil fuels and greenhouse gas emissions by pivoting to electric cars.

I think there is quite a strong parallel between the tech revolution, and the impact revolution. And it’s a strong parallel because everyone, even if they don’t know about impact investing or about finance, has heard of the tech revolution and have been affected by it.

New impact ventures are disrupting traditional models of big business, in the same way that tech start-ups disrupted the business world. Technology is the sea upon which every ship sails. And it will be the same for impact.

Impact also offers huge opportunity for governments (whether through setting up outcomes funds or using unclaimed assets etc.) to maximise efficiency and effectiveness of government expenditure, and to harness the capital and innovation of the private sector.

Yet I believe their biggest role also is to create the environment for this new industry, this new way of doing things to flourish. Similar to the development of the venture capital industry, when governments introduced certain incentives and regulations that allowed the venture capital world to flourish, governments have a responsibility to do the same for impact

Do you think social impact investing is inevitably a politically left of centre concept, or can it gain traction among conservatives?

I think that’s a great question.

In IMPACT I show impact investing and impact economies as something both sides of the political aisle can support. What appeals to more conservative-minded politicians and business leaders is the more efficient use of government money, and the harnessing of private sector innovation and capital to support social, environmental government wide policies projects and investments. This is also popular with right of centre people as this means it reduces the risk for government.

Also because we are increasingly adopting an outcomes based model, governments only pay when results are achieved, which again would appeal to the right.

And on the other side of the fence, liberals appreciate the way impact investing helps the most vulnerable. It’s a way to create a fairer, more equal society.

In the US I found a lot of cross party support for my ideas. High profile Republicans and Democrats have both endorsed or supported some of my proposals.

Specifically what regulations would you like governments to introduce to aid impact investors?

At the moment we have a system that is set up to support traditional ways of doing business — profit and risk based. It is not designed to help impact based businesses to flourish. So, for example, in the book there’s a section in the investor chapter on pension funds which outlines how pension savers can support socially-conscious enterprises .

A lot of pension funds are solely driven by profits. Delivering a return on their investment is a legal requirement. So one key change would be to amend regulations so it allows bond yields that are normally legally required to only invest in a way that maximises just profit or profit alone, to allow the funds to be invested in a way that considers both profit, and impact.

This change could affect pension funds, endowments, foundations and more. Investors often express the view that they would like to consider impact-driven companies and projects, but point out that their hands are tied because they can legally only invest for profit.

If you had one message for global business leaders what would that be.

To be frank, I don’t really have one message because I understand that realistically the majority of business leaders are not going to like what I have to say. There’s a minority, who I call progressive, who seem open to innovation, so I am hoping to reach them. I think ultimately though business will just fall into place, because of other pressures of investors, consumers and eventually governments.

For me it’s not a matter of if things are going to change — but when they change. So in the book I exhort business leaders to stay ahead of the game, by embracing impact. They will blaze a path for others to follow and reap the rewards of social investing before their rivals.

The book is available here and in all good book stores