For Martin Whittaker, CEO of JUST Capital, impact investing is in the eye of the beholder.

Martin Whittaker is the CEO of JUST Capital. He is responsible for the overall leadership of the organization. Previously, Martin was a founding partner and investment committee member at Sonen Capital, an impact investing firm, where he led private equity, real asset and direct investing activities. Before that, Martin was a Director of MissionPoint Capital Partners, a private equity firm; a Senior Vice President at Swiss Re, where he was part of the Environmental and Commodity Markets team; and a Managing Director at Innovest Strategic Value Advisors, Inc., a pioneering investment advisory and research firm within the environmental finance space. Martin also holds Board positions at the CREO Syndicate investment network and the Carbon Disclosure Project U.S.

Martin is a member of the Forbes Financial Council, a member of the 2017 Classy Awards Leadership Council, and has previously served as a judge for Fast Company’s 2016 World Changing Ideas Awards.

Martin received his Ph.D. from University of Edinburgh, an MBA from the University of London, an M.Sc. from McGill University and a B.Sc. from University of St. Andrews. Martin has also served as an Adjunct Professor at the University of Toronto, and provided expert testimony on environmental markets to the U.S. Senate.

Christopher P. Skroupa: So, just to launch right in, how have you seen the impact investing field develop over the last five years and how do you see the impact investing field develop over the next five?

Martin Whittaker: Over the last five years, we have seen a material acceleration of interest in impact investing, which means that there has been a huge amount of discovery of ways to pursue an impact investment strategy, how to put that together, and what that looks like from both an impact investment point of view and an investment point of view. Over the 15-plus years I have been involved in the space, it has gone from a small movement of very passionate people to being almost mainstream.  I think you can see it as a ripple effect that has spread the idea of impact investing far and wide. What I’ve seen over the last five years in particular is a much greater focus on the impact side—what impact actually means, how to measure it, and what it means to the individual investor or practitioner.

The second part of your question speaks to impact investing strategies that are tailored to meet the specific objectives of the individual organizations. In other words, how to do this not as a “one size fits all,” but with the understanding of what it means for me and my particular organization.

I think what we’ll see in the next five years is a much more disciplined approach to impact investing in terms of measuring progress, effectiveness, and outcomes in a much more traditional sense. Even now, people who come to this space go through the same process as those who came through five years ago went through: What does it mean, how do I do it, what does it mean to me, and how do I measure success? That learning curve hasn’t changed much. What needs to happen is that we help people move forward faster, and with more confidence, so that people coming into the space now can learn from the mistakes of those who were on an impact investing journey five or ten years ago. It’s natural that you’re going to get organizations that are way more advanced and sophisticated, as well as ones that are just starting out and trying to figure out what it means. I think it would behoove everybody to communicate more and communicating around impact investing strategies that actually work is crucial to their future success.


Skroupa: That’s really interesting. So, you guys have just published your second annual survey: You polled 50,000 Americans on their priorities regarding corporate behavior. How have you seen public priorities shift in the impact investing field, and have you seen a rise or fall in a specific interest areas in the last ten years?

Whittaker: When we talk to the American people, we don’t talk about impact investing—we simply talk about what actions of corporations they feel strongly about, what they like/dislike, what they feel is more or less important. The data and meaning we derive from all of that research is certainly relevant to impact investors, but that is not the basis of the conversation that we’re having with the public.

What I have seen personally over the last ten years is a rise in importance of social issues and in the last few years in particular, a rise in importance of workplace issues such as diversity, fair pay, how you treat your workers, what is the definition of a worker… Those things weren’t really on the agenda ten years ago, not really outside of a small number of people. Ten years ago, it was much more about environmental issues.

What’s clear to us is that in America today, the most important things relate to people’s sense of economic vulnerability, and the idea of being treated with a sense of fairness and respect. How much you pay people, how you treat people, what kind of benefits you provide, all of those are more important than how a company manages environmental issues or how a company deals with supply chains, at least in the eyes of ordinary Americans.

One of the things that surprised us is how people feel about what you might call traditional issues (pay, job creation, hiring/firing, discrimination practices). They are more front and center now than they were in the past, when it comes to people’s sense of what the role of the modern-day corporation is. I feel that these issues will only become more important in the future, and that that is going to be an important driver of transparency on how companies perform on such things. And by extension, uncovering data so that people can make comparisons of company performance on those issues is going to be crucial.


Skroupa: So seeing this sort of shift from environmental and sustainability to more social and employee/workplace-oriented concerns—we’re seeing a rise in data demand, we’re seeing a rise in analysis but have you seen a shift in corporate behavior directly as a result from this shift in concern from stakeholders?

Whittaker: It’s still early, I would say…definitely among the leaders. The leaders of the companies that we analyze are very progressive about how people are paid, how they are treated. Leadership on these issues are going to be tenets of their business leadership overall, and tenets of the way their companies operate. I’m thinking of people like Mark Benioff at Salesforce and Mark Bertolini at Aetna, who, upon learning that full-time employees working at Aetna—which is a Fortune 500 company—weren’t making a living wage, promptly decided to pay them more.

So I think we are beginning to see real leadership by companies on human capital issues. But there is still a dearth of data, and that is where JUST comes in. I think that companies are going to have to pay attention to these issues whether they like it or not.

If you look at the rise in prominence in crowd-sourced data sites like Glassdoor (one of our partners), they are shining a light on what companies pay their people, whether companies like it or not. I don’t think companies have a choice. I’ll be honest with you, companies have to get ahead of these issues or they’re going to be behind and everyone is going to know, it’s not something they’ll be able to keep in the dark.

When I started out doing this sort of research twenty years ago, it was very hard to actually know what was happening, environmental issues included. Just because a company puts something in their annual report and later in their sustainability report didn’t mean it was actually happening. Now, it is becoming increasingly difficult for companies to manage the flow of data about their company and about their practices, as it’s not all coming from them. And to make matters even more difficult, companies can no longer stay silent on social issues.  I think that there is going to be a revolution in the HR field because pay used to be a private matter between you and your employer. Pretty soon, people are going to know how much you pay your people, how much your job pays, and if you’re being treated unfairly—it’s almost a democratization of HR. I think that’s happening and it’s sending major shock waves through companies and their relationships with employees.


Skroupa: Wow, that’s a really interesting way to think about it. Obviously these companies are going to align with public interest in order to improve reputability and branding so people associate them with these more positive things, which speaks volumes from an investor perspective.

Whittaker: I feel that from an investor standpoint, there is a tremendous pickup in appetite for “alternative data” on companies. Think about the deluge of data on companies—not the data that they’re putting out necessarily, but the data you can get from multiple sources. The idea that investors can look for ways to outperform the market, ways to reduce risk, ways for them to generate a competitive return but at the same time align with their values. They look to invest in a way that properly merges together social outcome and investor return, not because they feel it is morally the right thing to do, but because it is going to build a better business.

I think that there’s a collision of worlds around technology, data science, artificial intelligence, business performance analysis and social impact. I think that is going to drive the impact investing world forward in the next decade.


Skroupa: Impact investors are obviously using these data analytics, they’re using these sources of information such as JUST Capital, but have you seen them almost crowdsourcing the way that they align an impact investment portfolio, or do you feel like they are focusing on specific aspects, whether it be agriculture or renewable energy or workforce relations? Do you find it’s a more overarching impact that they are trying to make or are they more hyper-focused?

Whittaker: It really is a full spectrum. For example, there are many investors for whom impact investing simply means a private equity, venture capital, or a real asset strategy focused on generating a positive environmental or social outcome on issues most important to them. Others will have a different interpretation, or strategy.  That is all fine.  I do see more and more investors get interested in new and alternative or different kind of data sources, especially alternatives from managers and hedge funds. So data-driven hedge funds, quantitative hedge-fund managers are showing more interest in social impact in their strategies.

I think most of the capital that gets invested through managers, whether it’s pension money, foundation money, or high net-worth retail investor money, actually gets invested in very traditional ways. Investment management is not really meant to be a particularly adventurous or entrepreneurial profession. It’s about reducing costs for investors, generating attractive risk adjusted returns, providing income, and protecting or growing wealth.

So in some sense the industry doesn’t move that rapidly, and it shouldn’t. Of course, some parts of the industry are more innovative —typically the hedge funds or the more entrepreneurial thematic asset managers—but for the most part, we’re talking about huge pools of capital that adhere quite tightly to proven strategies. So I feel that just as the mainstream investment management industry still operates across the entire spectrum of asset classes and strategies, so the impact investing sector also operates across the full spectrum.


Skroupa: Yeah, that’s a really difficult practice to put into a box. Impact investing is obviously an evolving, constantly morphing field.

Whittaker: To me, impact investing is in the eye of the beholder. Like anything else, you can do it really well or you can do it badly. I always think about it in terms of the discipline you need to generate a return on capital, which is really hard to do. There is the same level of difficulty and challenge and intensity on the financial side of generating a return as there is on the impact side of generating a positive impact. These sorts of events and initiatives that you’re involved with to me are crucial because it’s the way word spreads and best practices spread.