In a world of scarce resources, growing populations and rapid urbanisation, consideration and management of a company’s impact on wider stakeholders have become an undeniable reality for the business world. Judy Dlamini, Chairman of Lintel Capital, tells us about her beliefs in impact investment.
It’s widely recognised that it is time for the investment world to catch up. Companies that strive to improve the lives of employees, customers and society will ultimately outperform those that merely focus on economics due to their enhanced societal impact.
Sustainability is no longer a premium option; today, it is necessary to consider sustainability just to survive the rapid pace of global change. However, to thrive in the new millennium requires a values-driven approach and an aligned culture to ensure long-term sustainability.
Culture trumps strategy anytime.
Lintel Capital is not an impact investor per se. However, we do concern ourselves with the broader context in which a company operates to fully understand and maximise its value. We view ESG stakeholders through a commercial lens, seeking to minimise risk and maximise opportunities. Impact, therefore, is integral to our investments, rather than a by-product to the commercial case. Further, in order to ensure delivery, we believe all ESG activities should be linked to a core value that is part of an organisation’s purpose and culture.
The following beliefs inform our investment approach:
- Impact does not discount returns, but rather seeks to enhance returns
- Impact perspectives give us a deeper and more holistic understanding of our investees
- It is more impactful to promote progress within mainstream companies than to solely target positive impact opportunities (e.g. screening)
- Less is truly more. Simplicity and focus are preferred over complexity for successful implementation
- Culture, more than rule books, determines how an organisation behaves
Our approach is commercially-led and combines ESG considerations together with enterprise culture as a critical driver for performance and therefore returns. Having a truly integrated view of impact within our investment approach allows us to:
- Reduce execution risk;
- Build investable corporate governance;
- Build environmentally and socially responsible companies; and,
- Build organisational capability and performance through positive enterprise culture.
Culture trumps strategy anytime. Without true motivation for a company to drive positive impact, any exercise to implement change or measurement becomes a mere intellectual exercise and is doomed to fail.
Impact-related activities should not be a burden but should rather have a clear value proposition for the company. If not, what gets measured won’t get done, but simply fudged.
We understand that successful impact outcomes are not simply a function of writing policies and KPI measurement. Instead, successful outcomes depend on 4 key principles:
- Alignment between investors and investees over objectives
- Pragmatic, reasonable, and applicable policies
- Buy-in and adoption at all levels of an organisation (culture)
- Commercialization of impact
If these can be achieved, impact imperatives will be embedded into the business plan alongside existing priorities, which are measured and reported on.
It is our experience and belief that companies that live their values and actively integrated external stakeholder considerations are healthier, more productive, and more attractive to customers and, therefore, investors.
