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Rethinking our Economic Systems: A Conversation with Global Impact Leader Delilah Rothenberg

Jun 2, 2023

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A conversation with Delilah Rothenburg
The Global Impact Leaders, from the Sorenson Impact Center, is a diverse and inclusive network of impact practitioners and thought leaders working to solve the world’s most pressing social and environmental problems. In this Q&A, Delilah Rothenberg, an inaugural member of the group, discusses the need for system-level change in how we conduct business and structure markets in order to solve critical issues.

Delilah Rothenberg is a Co-Founding Partner and the Executive Director of the Predistribution Initiative (PDI), a multi-stakeholder non-profit organization designed to support investors in aligning their investment governance, financial analysis, and asset allocation practices with the principles of system-level investing and systematic stewardship. Delilah has nearly two decades of experience in finance across asset classes, having worked with private equity investors, lenders, and project developers on growth financing, ESG integration, and impact strategy. Here, Delilah shares about her work at PDI, why we need to rethink our economic systems, and her hopes for the future of impact.

Please tell us about your work at PDI. What project are you excited to be working on right now?
PDI has a number of exciting projects, from a collaboration on what regenerative investment structures can better support sustainable, affordable housing, to a paper on the business case and mechanisms for institutional investors to pursue the concept of “stakeholder capitalism.”

We take a “macro-to-market” approach. This means engaging in projects like Beyond Bretton Woods, which contributes to the global conversation on rethinking our economic systems, and other projects that create specific tools for investors to implement change.

For instance, through a consortium of organizations developing a Taskforce on Inequality-related Financial Disclosures (TIFD) and through our Investor Contribution 2.0 project with our partners at Impact Frontiers, we are helping to steward the co-creation process of disclosures that can support investors in better understanding their contributions to systemic and systematic risks. Through our collaboration with the Responsible Asset Allocator Initiative (RAAI), we are working with institutional asset owners and allocators to rethink how they use financial benchmarks. If our financial benchmarks to date have not been pricing in negative externalities, how can we use them as performance targets to meet or exceed moving forward in sustainable investing? Rethinking these performance targets unlocks the potential to pursue sustainable investing that aligns with the concept of intergenerational fiduciary duty.

What keeps you inspired in your work?
Quite simply, it is painful to see negative impacts in the world. I’m not sure I could just sit back and enjoy life without trying to improve the systems with which I’m connected. The idea that we are all connected and dependent on one another and nature is incredibly inspiring.

What does being part of the Global Impact Leaders network mean to you?
It is an honor to be included amongst so many inspiring colleagues in this field. Much of our work at the Predistribution Initiative (PDI) builds upon what others in the group are doing and have done. Our work also leverages and seeks to amplify the voices of those who haven’t historically been included in the key decision-making spaces when it comes to finance and business. There are a number of other members of the inaugural group who share this approach, and I hope we can support bringing new voices into the conversation from historically marginalized populations globally.

What do you hope this group will achieve?
The Sorenson Impact Center seems incredibly well-positioned to help make the business case for system-level change in how we conduct business and structure markets. While impact investing has historically often focused on the impacts of companies’ products and services, the actual structures of investments and markets also have impacts. How capital is allocated, to whom, over what time horizons, and the distribution of risk and return all matters. I hope the group will be able to raise awareness about these issues and inspire private sector actors to advance change.

What are your hopes for the future of impact?
I imagine we’d all love for impact investing to scale with integrity, holistically addressing the challenges identified in the SDGs. But we need to do more than leverage existing market and investment structures to achieve this change. Those very structures, which distribute risk and return so unevenly, are leading society toward vast wealth imbalances, unsustainable resource consumption, and polarization between the many and the perceived “establishment.”

How can the impact field maximize our efforts to solve critical issues at scale?
To make these changes, we need new interpretations of risk and value from the very top of the capital markets value chain – asset owners and allocators. This means changing the interpretation of the fiduciary duty to account for the health of human and natural systems (externalities, or systemic and systematic risk and return), developing new approaches to account for value which reinternalize externalities, and connecting emergent thinking evolving in macroeconomics with new approaches to investing.

For instance, there is a lot of discussion amongst economists and academics about rethinking GDP. We can also have conversations about rethinking whether workers should be a cost on the income statement or an asset on the balance sheet. How can we better value the caring economy? Should we be so dependent on time-value-of-money valuation methodologies, like internal rate of return (IRR), which incentivize making as much money back as fast as possible, which may be in conflict with long-term sustainability? Can we think of weighing IRR in a more balanced way with multiple on invested capital? And what is invested capital, anyway? Is it just financial capital, or also social and natural capital? Who takes what risk and creates what value in the value creation process, and how should they be compensated?

What advice or encouragement would you give to someone new to the impact field?
Keep an open mind, and try to take an empathetic, patient approach. Most people are good people and mean well. Sometimes, we just don’t understand each other’s perspectives and experiences, which have shaped how we act. Meeting someone with resistance often begets resistance. Love, compassion, and empathy pave the path to healing for ourselves and the world around us. Oh, and sign up for the Predistribution Initiative newsletter, and follow us on LinkedIn and Twitter!

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