Social Purpose : Purpose is not a solo act . To find meaning and quality in one ’ s life means to discover the importance of relationships . It is those relationships that allow people to build their own business or role within a business . When those roles involve or engage others in meaningful ways , it gives us a sense of value , grow and obligation to engage .
Societal Purpose : Does what we do matter ? When we can answer yes – that our work has mattered to others , to society or to ourselves – then we have achieved societal purpose . Whether it is small personal choices , broad gestures , or work that has a systemic , enduring impact , societal purpose provides meaning to ourselves , our customers , our families and our communities .
The Meaning for Businesses The purpose economy is already becoming a powerful part of many businesses . Consider John Mackey , co-founder , and CEO of Whole Foods Markets , whose “ Conscious Capitalism ” movement led to the launch of the Whole Planet Foundation driven to eradicate poverty , a loan program designed to support local farmers and initiatives to support human animal treatment and promote health and wellness . Virgin ’ s Richard Branson launched “ The B Team ”, which is looking to shift the focus of accountability for businesses from just looking at the numbers but also at the planet and its people .
TRANSFORMATIONAL FINANCE In 2020 , Dominic Hofstetter , authored a white paper for EIT Climate-KIC titled “ Transformation Capital – Systemic Investing for Sustainability ”. ( EIT Climate- KIC is Europe ’ s largest climate innovation initiative , leveraging the power of innovation in pursuit of a zero-carbon , climate-resilient , just , and inclusive society .)
Hofstetter defines Transformation Capital as systemic investment that catalyses mission-driven sustainability transitions in the real economy . A system that would be developed , tested , and scaled through a collaborative , open innovative program supporting the sustainable financial movement .
Why Capital Matters Hofstetter argues that to safeguard human civilisation , we need to fundamentally change socially and economically . It will require a massive shift in the way we think about not only our cities and the way we use land , but also in terms of transportation , energy , industry , and infrastructure .
The problem is that the current paradigms , structures , and practices of our financial institutions separate market value and human value . But increasing global disruptions such as climate change and the COVID 19 pandemic begin to undermine the stability of traditional financial assets .
Hofstetter explains that over the last ten years , many sustainable financial initiatives have aimed to mobilize climate finance at a trillion-dollar scale . Their intentions have been worthy , but the traditional approach prioritising risk reduction over value creation has limited the ability of the financial sector to make a genuine , meaningful impact on the larger economy .
The deployment of financial capital is one of the most effective and systemic ways to influence structural change . Hofstetter calls for a new approach to investing with the specific goal of empowering systems transformation . He refers this new form of capital as Transformation Capital .
Transformation Capital Transformation Capital provides a holistic investment logic aimed at deploying capital to catalyse sustainability transitions and capturing long term financial returns . It involves multiple stakeholders , and most importantly it is action oriented . It is designed to act as a legitimate chance at creating a genuine , sustainable finance community - one where collaborative research , prototyping and investing become the new norm .
One of the key elements of Transformation Capital is the concept of “ Portfolios of Investments ”. This is a system thinking approach that sees the potential of transformative change through the collection of a broad range of initiatives into one strategic investment approach .
The goal of Transformation Capital involves deploying money where it is needed the most - not where it can generate the highest return on investment , but where it can generate the highest return for society at large . One that moves away from a project-by-project point of view and towards something that is more singularly focused on creating a pipeline of investment opportunities that generate positive results for future generations .
Transformation Capital is a paradigm that challenges traditional finance thinking to create an environment where business owners , innovators and investment professionals all come together to ask not what they can do for themselves , but what is possible to accomplish for all of us .
PUBLIC MISSION Globally there is more and more evidence of the emerging failure of capitalism to stem inequity and support sustainability . The divide between the masses and the wealthy is increasing . There are growing concerns that capitalism has lost its way . Mariana Mazzucato ’ s latest book titled “ Mission Economy : A Moonshot Guide to Changing Capitalism ,” speaks to this and more . In what is equal parts a critique of policy and a manifesto for the future , Mazzucato sheds light on some important systemic economic challenges we are facing today .
With “ Mission Economy ,” Mariana Mazzucato dissects the issues inherent in modern day capitalism against the backdrop of certain issues like the climate crisis . She calls for a rethink of the role of government within the economy and society and the need to recover a sense of public purpose .
Specifically , she points to a few elements such as :
• Short termism in the financial sector .
• Solely focusing on financial value of business .
• The collective dependencies of most countries on fossil fuel .
• The diminishing role of government to support public wellbeing .
Mazzucato argues that as world governments do less , they take fewer risks in terms of bettering society . Mazzucato wrote , “ If government is indeed a value creator that is driven by public purpose , its policies should reflect and reinforce that .”
In her book , Mazzucato addresses the arguments that are so often used to defend what most people agree is a broken status quo . Specifically , she addresses the role of governments . They should be responsible for “ tilting the playing field ” in a way that is good for society . They should not simply be employees of the markets at large .
Mazzucato identifies the following principles for a new economy :
• vision and a strong sense of purpose
• risk taking and innovation
ECONOMIC DEVELOPMENT JOURNAL VOL 14 NO 2 2021 47