2022 is an exciting year as this marks Impact Engine’s 10th annual Chicago Impact Investing Showcase! This year’s showcase explores the roles of four key impact investor types: government, individuals, foundations and private funds. Our first event on April 5th focused on on government. Jessica Droste Yagan moderated a discussion with Melissa Conyears-Ervin (Treasurer, City of Chicago), Michael Frerichs (Treasurer, State of Illinois), Bryan Echols (Director of Impact Investments, Illinois State Treasurer), and Brad McConnell (CEO, Allies for Community Business).
The event kicked off with opening remarks from Jessica around how we think of terminology around impact. She explained the various types of investing: socially responsible investing (SRI), environmental, social and governance (ESG) investing, and Impact Investing. As Jessica explained, SRI includes screening investments in or out based on whether or not they align with a specific mission or set of values; ESG includes investing in companies based on performance in three areas: environment, social, and governance (particularly in terms of how a company is run); and impact investing as intentionally investing to create a specific social or environmental impact. Impact Engine follows the impact investment approach and Jessica walked through the five main ways that investors can intentionally create impact via the 5P Framework. The 5Ps include: Product, Place, People, Process and Paradigm, and investors can invest with one or more of these in mind at any time.
Following the introductory remarks, the four speakers provided real world examples of the role the government plays in investing for impact. Brian Echols, the Director of Impact Investments for the Illinois State Treasurer, brought up key questions that his team is focused on addressing: How do we create opportunities in low to moderate income communities? What role does the banking sector play in how we address systemic racism? He touched on these questions and more throughout his remarks.
City Treasurer Conyears-Erving explained that as Treasurer, she does not believe that it is enough to simply earn money for taxpayers. Instead, her team plays an active role in making people’s lives better. She explained that the government has to hold itself to a higher standard and aim for better outcomes beyond only focusing on the greatest possible financial return. Treasurer Conyears-Ervin explained that in 2020, she joined together with Illinois State Treasurer Michael Frerichs to create the Advancing Equity and Banking Commission (AEBC), a network of prominent banking institutions anchored in Illinois and committed to advancing equity and eliminating systemic racism in the banking industry though equitable hiring and lending and investment in Black neighborhoods.
State Treasurer Frerichs also explained that in his view, the key to growing our economy is to support local innovation and to do so equitably. He explained that his team has a job to invest while also having a responsibility to maintain the long term fiscal health of the state, while tending to the wellbeing of communities he represents, which includes economic security of millions of workers in the state of Illinois. Treasurer Frerichs explained that his team is laser-focused on innovating and adapting programs to meet the needs of local constituents while fulfilling their fiduciary responsibilities. He explained that his office integrates material ESG factors across all investment processes, from evaluation of individual issuers to the selection of fund managers. Both State Treasurer Frerichs and City Treasurer Conyears-Ervin stressed that they are focused on growing and investing in underserved communities as they believe there are great investment opportunities and opportunities to create jobs, grow businesses, and foster long term economic prosperity.
Brad McConnell, CEO of Allies for Community Business (A4CB), explained how his organization supports small businesses and thereby strengthens communities. A4CB’s mission is to provide the capital, coaching, and connections that entrepreneurs need to grow great businesses, create jobs, and wealth in their communities. He explained that their team believes that investing in small businesses and working with entrepreneurs who are already embedded in their own communities is the most consistent and efficient way to create jobs and therefore opportunity and wealth in underserved communities.
Brian Echols explained that when his team thinks about the 5P framework, they invest in people, place and programs. Ultimately, their focus on these areas can often lead to a paradigm shift. Brian explained that in serving the various diverse metropolitan areas within Illinois, he recognizes that there are communities in each that lack investment. When thinking about place within the 5P Framework, it is important to recognize that resources flow differently in different parts of the state and his team must listen to what each individual community needs. Then, it is important for the government to leverage state resources to bring equity in how they invest, and to make investments that will improve individuals’ quality of life. Brian feels that his team’s responsibility as a governmental entity is to be the first to step out and support these communities in the hopes that private sector and philanthropy will follow suit and add to the investment into these communities.
The speakers brought to life the role that cities and governments play in investing in our communities. They explained the various different ways that impact investing can work but all stressed the importance of following through on our commitments, tracking the capital to understand where it ends up, measuring impact and ultimately being able to communicate that impact outcomes back to the community.
In the Q&A, viewers asked what ordinary citizens can do to get involved in the government’s actions around impact investing. The panel’s recommendations included visiting 350.org which facilitates opportunities for residents to be involved with community organizations that are making a difference, or visiting Allies for Community Business at A4CB.org which offers various opportunities for individuals to support small business owners via coaching, skills development or providing grants or loans. Lastly, the Treasurers suggest reaching out to your elected officials with any ideas or recommendations to be more involved in this space.
Find more sessions on the 2022 Chicago Impact Investing Showcase page.
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