Impact investing: Changing the cost of doing business
Barry Palte, Founder of EQ Capital, wants to change the world of investment, one good cause at a time.
Speaking on TickerTV, Barry Palte elaborated on his background, his inspirations, and how events from his childhood in Africa to modern-day news stories shape and continue to inform his stance on the value of impact investing.
He described impact investing as linking stellar investment returns with measurable community benefits.
“For me ‘social impact’ is really improving the lives of people and improving the health of our planet. So, if we start from that basis…impact investing is actually making sure that the money goes to the right places to achieve those outcomes.”
His influences and social concerns – when it comes to the investment choices he both makes and recommends – stem from a childhood amid what was then called Rhodesia (modern-day Zimbabwe – Ed), with the country gripped by civil war.
“That – from a very young age – got me thinking about the way the world operates. We had farms which our family unfortunately lost and I was brought up in a racially polarised society by a white mother and a black mother.
“From a very early age, it was ‘Why is it that people can’t get on with each other?'”
When seeing the impact of something like a civil war had on wealth creation and preservation, Barry was acutely aware of the crossover between finance and its outcomes for the world.
“And that’s really what drove me,” he said.
After relocating to Australia and spending 12 years in senior roles with large investment institutions, Barry established his own investment business and was also Global Chairman of the International Association of Investment Bankers, a network of 11 investment banking firms around the world including in the USA, UK, Ireland, France, Italy, India, Brazil, Japan, China and Australia.
“I spent so much time in and around global financial markets,” he reflected, “I felt that there was a better way to allocate capital, and I felt that financial markets can be very transactional. So, I basically stepped down from all forms of investment banking work a number of years ago to focus 100% on social impact investing.”
The discussion turned to current events, including media coverage, of the ill-conceived decision by Rio Tinto to destroy sacred Aboriginal artefacts in Western Australia, has also had a negative impact on those corporations’ bottom lines.
“The Rio Tinto example is just a perfect example of what I call social impact investing,” Barry said. “The fact is that when decisions are being made, there was not a specific focus at the time on the negative externalities of what was being decided. If the people making the decisions…had actually thought through both the positive and negative investment, community and reputational outcomes different decisions would have been made.”
“My main focus is in healthcare, food and agriculture, circular economy and social infrastructure – those things which are critical for the health of people and the planet,” Barry said.
Outside of the headlines, Barry spoke of what issues he currently finds most appealing from an impact investing standpoint.
“My main focus is in healthcare, food and agriculture, circular economy and social infrastructure – those things which are critical for the health of people and the planet,” he said. One example is that as an investor in, and director of, a vaccine company, he is at the forefront of new medical innovations.
“This is a spin-off from the University of Adelaide, we’re working on getting a universal vaccine for pneumococcal disease, which has killed more people than COVID. Which is quite something.
“This Australian developed technology is spun out from some very smart scientists, and now I’ve been working with the CEO and chairman for the last three years to commercialize it, and we are really going well.”
Barry agrees that many businesses – particularly the CFO side of operations – struggle to understand how to measure things like social impact, and how it translates into a number on a spreadsheet. It’s his standpoint that corporate financial accounts should also explicitly reflect the social impact that companies have, and that this is something that should happen automatically.
“I think this is a very critical issue,” he said. “Until you can measure something and actually look at both the positive and negative outcomes from actually taking actions, it’s very, very hard to systematically direct capital to the right companies and projects,” he said.
“Within the investment world, everybody talks about internal rates of return and that is important. But we also need to measure social impact return side by side with this financial return.
“Impact investing does not need to be at the expense of investment returns…it’s the opposite.
“If you are focused on investing right, (you) will get the best returns.”