INVESTING FOR DEVELOPMENT
No matter if it’s R10 000 or one million, where your money goes will have an impact. That’s why it’s important not to limit your focus to an investment vehicle that can grow funds the fastest or highest. Chasing after this could be to the detriment of many people who may be paid poorly or lose their jobs because a bigger better player has come to take over their corner of their market.
A collaboration between ReGenerative Finance, Movement Generation and the Climate Justice Alliance has created a Just Transition Toolkit. It provides guidelines on moving towards a regenerative economy. A regenerative economy is one that protects people and the planet with a view to being sustainable. Some of the qualities of a regenerative economy are that wealth is viewed holistically and prosperity is shared.
If you’re an investor, make sure your money works in a way that empowers and equips positive life changes. This adaptation of the toolkit shows how adjusting your understanding of common investment terminology can help you invest in businesses that are good to people, and good for the economy.
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Conventional Investing |
Regenerative Investing |
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Risk |
Should be limited except in cases where high risk should ideally lead to high reward. |
Offers another interpretation of risk: that of taking a chance. As a regenerative investor you’re willing to back a start-up or an unknown entrepreneur. This is a good long-term strategy because increasing the number of small businesses is good for the economy. |
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Return |
Refers to the overall profit or loss on an investment. |
By expanding the definition of benefits beyond profit, other worthwhile options are evaluated. These can include: a return of dignity for people who are now gainfully employed, a return of community connection because of where a new business is based and a return to a more just economy where the poor have a better chance to improve their lives. |
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Interest |
A regular payment made by a borrower. |
Reframing interest to rather refer to concern and curiosity would mean acknowledging the importance of non-monetary factors such as employee wellness. This would be showing no interest in companies that pay minimum wage and showing priority interest to those that pay above a living wage. |
REGENERATIVE INVESTING FOR ENTREPRENEURS
In their book Regenerative Enterprise, Ethan Roland and Gregory Landau share ways in which individuals gather or exchange valuable resources.
Called The Eight Forms of Capital, these resources are social capital, intellectual capital, spiritual capital, material capital, experiential capital, financial capital, living capital and cultural capital.
This enumeration clarifies that ‘money is not the only form of capital flowing around and through us’.
If you’re an entrepreneur interested in playing a role in poverty alleviation, here’s how to give generously with three of these types of capital:
1. Acknowledge social capital
Landau and Roland describe this as influence and connection.
A person or entity who has ‘good social capital’ can ask favours, influence decisions, and communicate efficiently. Social capital is of primary importance in politics, business, and community organizing.’
Being aware that people bring their social capital to work, and that they leverage this social capital can help shape your thinking about employee value and remuneration. So, for example, promotions shouldn’t just be awarded on the basis of monetary impact to the company – i.e. who sold the most or saved the most.
Also evaluate who uses their social capital to the advantage of the company. This could be individuals who are able to spark enthusiasm amongst colleagues or someone who finds solutions to department issues because of their vast network. People with social capital that makes the workplace better and easier and happier deserve to be compensated for the important role they too play.
2. Recognise intellectual capital
Academic qualifications are useful, but they aren’t the only way to demonstrate or acquire knowledge. When it’s not legally required or a technical risk to the business, hire people who are smart but may not have the certificates to prove it.
Having a degree isn’t critical to many job functions, but millions of South African youth are unemployed for lack of tertiary qualifications. Or they started university and weren’t able to continue for financial reasons. Instead of recruiting graduates only, determine which positions in your company allow for on-the-job learning. And then hire people who can bring their smart brains to contribute towards the growth of your company.
3. Grow financial capital
Money is an essential resource in the world. And, consequently, say Landau and Roland, it’s influential. ‘It can be a powerful tool for oppression or (potentially) liberation.’ One of the ways that it can be impactful for the underprivileged is through fair labour practices such as paying employees a living wage. In reality, however, even a monthly living wage may not be enough to cover medical expenses for a chronically ill family member or to save towards children’s tertiary education. As an entrepreneur, you can however begin to change the financial capital of your staff by having an ownership model that doesn’t keep the wealth of the business solely for you and your family. Consider structuring your company to be a cooperative or to offer employee stock ownership or to phase in worker ownership. This would mean that in addition to earning a salary, staff have a chance of reaching a level of prosperity in the future as compensation for their hard work.