What inspired you to embark on this new path? What gap were you trying to fill?
Well, I actually haven’t left Wall Street… I am simply trying to help transform it to become a force for good. A healthy financial services sector is essential to driving global economic growth. If governed properly, the financial sector is the facilitator of capitalism. But we need a form of capitalism that fosters regenerative and inclusive global growth. In recent times, the basic trust has been eroded such that capitalism has proven to be divisive and exploitative. It has lacked transparency, focus, collaboration and purpose. Cornerstone was built to revive these elements of capitalism and move us in a better direction.
What are the greatest challenges you face convincing others to create “impact at scale”?
As with most start-ups, there are growth constraints based upon access to financing, access to talent, and the ability to build brand recognition. This is particularly challenging in such a highly regulated industry where the entry barriers and operational expertise requirements are quite high. Further, there is a huge amount of capacity in this highly competitive industry where the incumbents have enormous financial resources and a great deal to lose if they don’t compete effectively given their own need for scale. For a small firm to take even a modest amount of market share, it can be disruptive. But disruption and business model innovation are precisely what is needed to have that ‘impact at scale.’
How would you define the landscape today in terms of an openness to sustainable business practices among financial/investment firms?
We’re still at a place of uncertainty and skepticism. There has been language around the discipline of “sustainable” or “impact” investing that has proven to be politicized, polarizing and divisive. Further, it has tended to be somewhat ideological or judgmental. We prefer language that is pragmatic and focused on enhanced analytical processes… the systematic analysis of the most material environmental, social and governance (ESG) factors that need to be considered in the investment process.
We have often found on Wall Street that new processes and ideas that can challenge the status quo are faced with cynicism. This is not a time for cynicism. It’s a time for progress.
What do you believe is needed for an even greater movement to occur?
We need to see money moving. This will be based upon the grassroots demand for a type of advisory service where the asset owners demand that their investments are being made in alignment with their own values and aspirations. We also need to see the fundamental alignment of incentive structures around each piece of the capital markets to shift towards a longer-term perspective. We need to offer greater transparency in the investment and managerial processes associated with all aspects of the financial services industry.
What’s your 5-10-year plan?
It’s been said that when human’s make plans, god laughs. I aspire for Cornerstone Capital Group to be able to help the healing of capitalism (…which remains the best system the world has ever known for facilitating global prosperity.) As ‘Impact Investing’ implies intentionality and measurability, and as Cornerstone has loads of both, we plan to grow our business lines as synergistically and profitably as possible. We plan to prove beyond a shadow of a doubt that there need be no dichotomy between long-term corporate profitability and positively dealing with today’s enormous societal imperatives — ranging from climate change, education, and healthcare, to global access to energy, nutrition, broadband and women’s economic empowerment.
Excellent, Erika Karp is brilliant and I share her views, goals, aspirations and dreams. Looking forward to collectively making them a reality.