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Season 2 of “Stop & Talk” has arrived! This season, dive deep into the themes of purpose and opportunity, guided by the insights of leaders in the arts and culture, sports, philanthropy, finance, and innovation fields. Together, we'll celebrate local achievements and envision what's possible in San Diego County. Let's converse and inspire one another.
Hello, Grant.
Grant Oliphant:Hi, Crystal. Welcome to Stop and Talk.
Crystal Page:I'm thrilled for today's guest.
Grant Oliphant:Yeah. It's, this is gonna be a great conversation. We have Preeti Bhattacharji on the program to talk to us about the world of impact investing.
Crystal Page:And what is that?
Grant Oliphant:Okay. Good question. Impact investing is a fancy term for organizations that have a lot of assets using those assets in a and and how they invest them to advance their mission. So for a foundation it means that not only are we trying to advance our mission through the money we give away in grants, we're also trying to influence the world through the money we invest and having all of that be part of it too.
Crystal Page:I think that makes a ton of sense to me, but as a person who's not been in this world, and I'm gonna guess several of our listeners also haven't been in this world, what do you expect to dive into in this conversation? I wanna make sure everyone has a basic level of understanding.
Grant Oliphant:Well, we're gonna use some fancy terms Okay. And we'll get to that. And we will, by the way, have a breakdown of those terms, in the program guide online. But we're gonna get into how foundations and other organizations make the decisions that they do in thinking through Impact Investing, and what some of the challenges and barriers are, and what some of the real opportunities are. So we're gonna talk about all of that.
Grant Oliphant:I think we're gonna be talking with somebody who is a delight on the subject because she cares about it so much. I think the you know, what I what I I think we need to say about Preeti is, she is the head of sustainable investing at JPMorgan Chase Private Bank. JPMorgan's sustainable investing team's mission is to help clients achieve their financial, social, and environmental goals. And the Prebys Foundation, which is mentioned in this episode, not as a promotion but because it's important in terms of context, is working with JPMorgan as a client precisely because of their capacity in this arena. So Priti is important to us, in our work in San Diego to advance our mission, and her view of impact investing, I think, is relevant for the whole field in understanding how we deploy all of our assets to try and improve what happens through our philanthropy.
Crystal Page:Excellent. And just to be clear, is this financial advice?
Grant Oliphant:Oh, no. No. No. No. This is there is no financial advice given here, but, you know, what what people will find useful, I think, is we're hearing a lot these days about, for example, ESG investing and which stands for
Crystal Page:Is that related to MSG?
Grant Oliphant:Could be. But it stands for environmental, social, and governance. And the idea is that companies that take those considerations into account as they run their businesses tend to, over time, have better financial returns. Now that, like everything else, has gotten caught up in the culture wars of our society right now, and there's a whole debate going on in the in this field and in the broader society about whether ESG is the right frame, a useful frame. But I think what what all people who are listening to this program will benefit from is a deeper understanding of how the ways in which we invest our money actually have consequences.
Grant Oliphant:And we can either be intentional about those consequences, or we can be oblivious. And I think what this program is all about is striking a blow for a little more consciousness and having, broader considerations brought to the fore.
Crystal Page:That sounds great. Shall we dive in?
Grant Oliphant:Yeah. Let's do it. I think I think you're gonna love this conversation, and we'll talk afterwards about what we've heard.
Crystal Page:See you on the other side.
Grant Oliphant:Alright. So, Preeti, I'm so glad to have you here with me. Thank you.
Preeti Bhattacharji:Thanks for having me. I'm thrilled to have an excuse to come to San Diego.
Grant Oliphant:Well you'll be spending time in San Diego in part because the Prebys Foundation is very interested align with our mission, vision and values and advance what we're trying to have happen in San Diego. I'd love for you before we talk about all of that, just to share briefly how you came to be in this line of work and why it why it appealed to you.
Preeti Bhattacharji:So that's a fun question, and I'm gonna answer it by giving you a little backstory, which is to say, I never thought I would be in finance. I did my thesis on CIA operations in Tibet. I started my career as a journalist.
Grant Oliphant:Direct through line for sure.
Preeti Bhattacharji:Yeah. Absolutely. I started my career as a journalist, and that's where my passion was, specifically covering historically marginalized communities around the world. And I was working as a journalist when the financial crisis hit.
Preeti Bhattacharji:And I was watching as communities around the world cascaded into bankruptcy.
Grant Oliphant:Mhmm.
Preeti Bhattacharji:People lost their homes. The crisis hit entire towns like a tidal wave. And it was in that context that I frankly got angry and frustrated. And it was this really humbling and horrifying moment where it felt like markets ran the world, and nobody had told me that.
Preeti Bhattacharji:And I didn't have any of the tools to even begin to understand what was happening, much as do anything about it. And so that led me to a hard pivot, where I wanted to better understand what markets do, what they don't, what financial engineering even was. And I I developed this very, in the hindsight, naive, but, driving hypothesis that if markets could be used to destroy communities, I started to ask, could they be used to create and uplift and build community? What would it mean to actually harness the power of financial engineering and markets to create rather than destroy? And that very early question put me on the path that I'm on now, and I've been trying to answer that question ever since.
Grant Oliphant:So you actually, that path eventually led you into the foundation world, and you were telling me a story recently about how how that doorway opened for you, and you began to think about this convergence of markets and the power of foundations to affect them. So would you just share that story?
Preeti Bhattacharji:Sure. So there were a few threads that came together that that brought me to that that space in the foundation landscape. One in particular, I will give a shout out to a woman named Clara Miller
Grant Oliphant:Mhmm.
Preeti Bhattacharji:Who was an early thinker and revolutionary, I would say
Grant Oliphant:No question.
Preeti Bhattacharji:In Yeah. In kind of impact investing for foundations. And she came out with a manifesto right around 2011, 2012, where she asked of the Heron Foundation, are our investments feeding the problems that our grants are trying to solve? And that was a terrifying question for a lot of foundations. I think it was a terrifying question for Harron, but it was one that that foundation was ready and willing to grapple with.
Preeti Bhattacharji:And it was in that context that I came to know about her work and that foundation's work, and I thought, oh, that sounds interesting. I wanna be a part of that. And so through a friend of a friend, I ended up getting coffee with Clara. And long story short, I I showed up at that coffee with a marked up copy of their tax filings, which I had taken a pen to to say, oh, I have lots of follow-up questions about how you're gonna do that and what that looks like, which in hindsight, I must have looked like a serial killer sitting down with, like, a packet full of post-its . Or whatever.
Preeti Bhattacharji:Yeah. Right? And she, with such grace, which I later discovered she is it was just typical of her, said, you seem really into this. Come work with me. Help us write this business plan.
Preeti Bhattacharji:Help us figure this out. You're asking questions we don't have answers to yet, but I don't think anybody has answers to yet. So we're all gonna step into the unknown together and do some problem solving here. And, again, I've been working on that ever since.
Grant Oliphant:And, eventually, you ended up running the endowment for that foundation.
Preeti Bhattacharji:I I co led the endowment, and and I say that almost with hesitation because it was such a group effort. I mean, anybody who works in the space knows what that means. But certainly in partnership with our investment advisers and the staff and the investment committee and the board, I mean, building building something without a blueprint requires everybody. But yes, I was absolutely a piece of that.
Grant Oliphant:So part of what made Clara Miller such a revolutionary, and I love that term for her, She certainly was the vanguard, was that she identified that foundations are values based institutions that are ostensibly on a mission to do a certain thing, and she identified that many foundations in fact most were invested in ways that at a minimum were not aligned with their mission, and quite often were working against their mission. It was a lonely I think she was a lonely voice early on when she started talking about this, and if you think about where we are today, we're still in a place where the conversation about impact investing is in its infancy. So let's talk about what we mean by impact investing and where we are in this continuum of development around it. So what does Impact Investing mean? What does mission related investing mean?
Grant Oliphant:When you come in and talk to a client about why they should care about this or what it is, where do you start them?
Preeti Bhattacharji:It's a great question. Usually, I start by acknowledging that it can mean a lot of different things. And usually, it means one of, I think, three things. Either it means, number 1, values based investing. It means you as a foundation want to make sure that your investments align with your values.
Preeti Bhattacharji:So for example, I've worked with a cancer foundation that said, from a value standpoint, we cannot be invested in tobacco as a cancer foundation. That would anger our donors, our board. There's just no way that we could have alignment there. And so classic example of values based investing. You have a foundation that says based on our values, we will or will not own something.
Preeti Bhattacharji:That's that's example number 1. That's actually very different from example number 2, which is increasingly popular in the space. It's a thing called ESG investing. And typically, for foundations that wanna do ESG investing, they think, well, by looking at environmental and social factors, we think we think those are financially material, which means we think they could actually affect our financial performance. And so I was working with a a foundation recently, for example, that said, I see the world is changing.
Preeti Bhattacharji:I think I think the climate is shifting. I think consumer habits are shifting. I think regulations are shifting, and we wanna make sure we are future proofing our portfolio. We think there are risks and opportunities others in the market are overlooking. And so forget for a moment about our individual values.
Preeti Bhattacharji:We just wanna make sure that we're thinking about those risks and opportunities and pricing them appropriately. So that's the second approach, which is really all about market driven returns and making sure you're thoughtful about environmental and social patterns you think others might be overlooking.
Grant Oliphant:Mhmm.
Preeti Bhattacharji:And then the third approach is really deep impact investing, where you're saying, I wanna change the world.
Grant Oliphant:Mhmm.
Preeti Bhattacharji:I wanna use my capital to change something, to change a company's behavior, to change consumer behavior. It typically, that means you're investing in early stage private equity. You're investing in things like telemed in emerging markets. You're investing in vertical farms. You're investing in sustainable fashion companies.
Preeti Bhattacharji:Sometimes you're investing in really nerdy things like membrane filtration for water so you can purify water and make it cleaner. But that's that's kind of a earlier stage, often more innovation, often more risk, frankly, impact investing approach. And people bundle all 3 of those approaches like they're the same thing, but I actually find they're quite quite distinct in their application.
Grant Oliphant:Now in your role at JPMorgan, I think you told me that you have 4900 clients that you're working with.
Preeti Bhattacharji:In the US alone. So I I, am the head of sustainable investing for the US private bank, and that's not even including all of the activity around this in Europe and in Asia and in other parts of the market.
Grant Oliphant:And maybe 20% of those are foundations, so there's growing interest in the foundation arena, But to go back to your three examples, I think, even the most basic one. It may sound obvious to people listening that a cancer serving foundation should not be investing in tobacco, and yet that still remains a debatable proposition in the investment world where often times the mentality is maximize the return, so that you can do more good with the money that flows from that. How do you help organizations think through just a basic disconnect like that, where the value side of the house is speaking virtually a different language from the finance side of the house.
Preeti Bhattacharji:I found that the disconnect is actually getting smaller and smaller. I think the norms are shifting, and so I think Clara was pointing out now longer ago than I care to admit that sometimes investments are feeding the problems grants are trying to solve. I actually think that conversation's already happening, but it's it's a tough one. And, usually, it's a matter of stepping into investment committees, stepping into board conversations, and facilitating a conversation that's already there. Yeah.
Preeti Bhattacharji:Often, we're not the first ones to tell a board member about that. Most board members are already thinking about that these days. So I see my role less as informing them of that disconnect and more about helping them name the disconnect and figure out how they wanna navigate it and supporting them in that process.
Grant Oliphant:Yeah. When I think about this from Prebys' point of view, we care about Corridor mission, we care about basically four things. We care about health, we care about young people, we care about the arts, and we care about San Diego and the future of this community. And that actually is the driver for us in having a conversation about aligning our endowment and our investments with the purpose of the foundation. When you talk with with folks about why it's important for them to have this conversation for their own organizations, what do you pitch them on as the exciting part of it?
Grant Oliphant:Because so often when I hear this discussed, I I I probably should add this, so often when I hear this discussed, it's like a bitter pill that you have to take. It's like the whole debate over ESG right now. It's this horrible thing that somebody is making you do, or an expectation that's coming from outside activists, why is it worth having if you just wanna have integrity about your mission?
Preeti Bhattacharji:So I might be in the minority. I find it deeply exciting, and usually it gets exciting when you talk about specific companies, and you talk about specific examples. Most people, I think, come to a foundation because they care about the mission of the organization. They care about the programmatic work. And so being able to go, for example, to a foundation that cares about housing and say, hey, in your investment portfolio, you can buy bonds that help keep teachers and firefighters in the communities they work in.
Preeti Bhattacharji:These can be market rate bonds that get you a rate of return, but can help, help ensure that teachers and firefighters aren't commuting really far to the communities they operate in. Like, that gets exciting. It actually connects for a lot of people, the programmatic piece and the investment piece, especially if you're able to find places like that where you're not even looking at below market rate returns. You're looking at still market rate returns. It just brings it to life.
Preeti Bhattacharji:And I think, again, in this zooming out for a moment, especially post 2008, there's a broader context and hunger to know what your money's doing, to own what you own, to know what you own. And so I think this entire work can bring clarity and transparency to a place that has historically felt really opaque and confusing. And I think for all of those reasons, it's often exciting to be able to talk to an investment committee about these opportunities because it's a way to connect what has historically been the investment function and the program officer function, and it give them a common language to speak to one another, and a a common set of investments to all get excited around. I find that's usually really exciting for a group.
Grant Oliphant:When I think about this from a community perspective, what you're describing is exactly what we wanna have happen on the larger scale in San Diego. As we have been talking about using our entire portfolio for mission, or at least in ways consistent with mission, We're not saying it because we wanna attract attention to Prebys for that, we're saying it because we hope that whatever we learn from this, the good, the bad, and the ugly will inspire others in the community to go down this path with us. I'm curious what questions you get from foundations as they venture into this space? You know, what are they curious about? What questions are they asking?
Grant Oliphant:And what holds them back?
Preeti Bhattacharji:So I typically get 2 buckets of questions from opposite ends of the spectrum. Bucket number 1 are questions from foundations that say, am I gonna lose all my money doing this? Is it gonna be is this really just grant making pretending to be investing? Isn't this concessionary? Won't we lose money over time?
Preeti Bhattacharji:That's kind of concern number 1. That this is actually going to slowly erode the endowment over time. The second set of questions I get is from the opposite end of the spectrum. These are the questions that say, does this really make any difference? Is there any impact here?
Preeti Bhattacharji:Isn't it all just greenwashing and impact washing and noise? And and I think those questions come from different places. 1 is a concern about fiduciary duty, financial materiality, all of these very technical terms that are actually very important.
Grant Oliphant:Right.
Preeti Bhattacharji:And the other is a question around authenticity and integrity and a and an appropriate inquiry around whether any of this actually could change anything. Whether you can use capital markets to actually repair damage that has often been done by capital markets. I think those are often the 2 main hesitations. Concern that it will lose you all your money, or concern it won't actually have any impact.
Grant Oliphant:And when you're talking with a foundation that has the concern about the power of capital markets to repair harm that Capital Markets have caused, that really is an important conversation in philanthropy. How do you impress them or convince them that indeed they can? Or do you? Are you trying to sell them on this point of view?
Preeti Bhattacharji:In general, I find sales isn't my orientation. But what I what I try to do is convey my experience and and beyond even my experience, the experience of investees, which usually means going on-site, which means going somewhere and saying, this is a for profit social enterprise. You can see the people who've been employed. You can see the products and services. You can see the good that's been done.
Preeti Bhattacharji:It's funny. It's actually a lesson that I think impact investing has been slow to learn from philanthropy. I think philanthropy on the grant making side has always been really good about site visits and impact and connection and the emotional component. And impact investing is just now getting to the point where it's realizing we also have to do that. We have to be able to introduce, investors to investees so they can see you invested in a farm worker co op.
Preeti Bhattacharji:Go into the field. Meet some of these farm workers. See what changes has made in their lives. Mhmm. That can help people vet whether or not this is real and come away with the understanding that this can actually create change if it's done well.
Grant Oliphant:Yeah. Are there areas that you are seeing, as early opportunities or real opportunities where we're already proving that, that this approach to the markets can in fact change what's happening on the ground.
Preeti Bhattacharji:Absolutely. I'm almost overwhelmed with examples.
Grant Oliphant:You mentioned housing earlier, which is a a really interesting one for us in San Diego. We talked earlier about healthcare, but that those are others, anything that comes to mind.
Preeti Bhattacharji:I'll touch on a different category around climate. Mhmm. They're again, zooming out for a moment. The world is on fire. We have a deep and broad climate crisis.
Preeti Bhattacharji:And especially as somebody who cares about communities, I'm mindful of something that we've heard the Ford Foundation say for a long time, which is that climate change is a social justice issue because it is communities of color. It is low income communities that get flooded and catch fire first, and really suffer the longest consequences of climate change.
Grant Oliphant:And San Diego, unfortunately, has just experienced such an episode that demonstrated exactly what you just said.
Preeti Bhattacharji:Absolutely. And that is heartbreakingly not unique in this moment. And so, especially in that context, I think so much of our future depends on figuring out new technologies, that will help us mitigate carbon and adapt to carbon, and figuring out ways to do that productively. And we're seeing really interesting investments in that space that give me real hope that can figure out ways to build buildings and insulate buildings and heat buildings in a way that is much less carbon intensive than historically that we've relied on. Same with transportation.
Preeti Bhattacharji:Same with sustainable aviation fuels. I mean, these are all spaces where you're seeing leaps and bounds from a technological standpoint, and they're being capitalized by some of the dollars in the impact investing realm. And so that's a place where we need innovation and we're seeing innovation. And a lot of that innovation is coming from Impact Investing Capital, often Foundation Impact Investing Capital that is willing to take risks and understands the importance of those changes.
Grant Oliphant:Yeah. I think that's such a terrific example going back to your 3 part framework for how people enter into this conversation. If some folks are what I hear you saying is at that 3rd level of advancing mission, climate is a good example of an area in which we're already seeing opportunities to do that by making appropriate investments in renewable energy for example. But there's also a concept at the second level of what you had mentioned earlier in terms of also a concept at the second level of what you had mentioned earlier in terms of ESG and responsible investing even if you don't care about the values or mission piece of that, and that comes up around the concept of stranded assets and future proofing. Would you say a bit about that? Because I think this is such a core concept for people trying to wrap their head around why from a business standpoint there's a case for this.
Preeti Bhattacharji:Yeah. So as we think about the world in 2024
Grant Oliphant:Mhmm.
Preeti Bhattacharji:And as we look around us, the economy is shifting. We're on the brink. I don't think this is controversial to say. We are on the brink of the biggest decarbonization trend we have seen in human history. Mhmm.
Preeti Bhattacharji:And we are seeing 1,000,000,000,000 of dollars coming in, particularly from the government from governments around the world pushing for it. And there there are ups and downs to the decarbonization movement, but I think the macro trends feel certainly clear to me. And in that context, the question becomes, where are you gonna be as that trend evolves? Are you gonna be on the cutting edge of it? Are you gonna be caught by surprise as it happens?
Preeti Bhattacharji:Are you gonna be left with, to your point, kind of stranded assets that felt like a great idea because they were key assets in the traditional energy space? Or are you gonna think proactively around how those assets are gonna get repriced over time? And so I don't have a crystal ball. If I did, I don't know what I'd do with it. But, I could say just from where I'm sitting, it feels again, it doesn't feel controversial to say that any fiduciary, anybody who's thinking responsibly about risk and returns in a portfolio should be asking questions around, what what the energy mix of the world will look like going forward, and trying to think proactively about building a portfolio that anticipates those shifts.
Grant Oliphant:The market isn't great at thinking long term, but it is better at reading trends than we sometimes give it credit for. Where are we in terms of its capacity to read a trend like the decarbonization trend that you're describing?
Preeti Bhattacharji:Oh, that's a big question. My honest answer is erratic. I think the market is responding erratically and not without
Grant Oliphant:So the reality is for somebody investing around concerns with climate or with that as a priority, It's a long game as opposed to a short game.
Preeti Bhattacharji:I I think that's actually true of a lot of these themes. So we should actually have that conversation. When I think about sustainable investing, when I think about impact investing, I think about investing in long term mega trends. These are intergenerational trends. And that isn't everybody's investment horizon.
Preeti Bhattacharji:Some people are investing because they've gotta send their kids to college in the fall, and they need that capital to be able to cover that tuition. But foundations, in my experience, are usually long term investors.
Grant Oliphant:Mhmm.
Preeti Bhattacharji:And so I actually think it's an interesting sweet spot for foundations as as foundations think about what will their capital be doing 10, 20, 30 years from now. And so to your point, much of what I'm describing presumes that you're a long term investor. But in my experience, most foundations tend to be.
Grant Oliphant:That's correct. Yeah. We hope. We certainly hope that we are. I'm curious what you mentioned a couple, but I'm curious what misconceptions come up in your conversations with folks about investing in this way?
Preeti Bhattacharji:Oh, also a great question. So we touched on 2. One of them being that you're gonna lose all your money, and the other being that you're not gonna have any impact. Yeah. I would say a third is actually a misconception I often get from students.
Preeti Bhattacharji:There's a lot of excitement about this topic coming from from the younger generation, from Gen z, from students. I've toured classes and campuses all over this country, and I'm I'm glad to see that level of excitement. But I think one of the misconceptions they often come to the table with is that doing well will they will doing good will always help them do well. Mhmm. And that there are no trade offs, and this space is all kittens and rainbows.
Preeti Bhattacharji:And you can have environmental and social and financial outcomes, and they'll always be in perfect tandem. And that always makes me feel very cynical and old because I'm I'm often the one who has to say this is not kittens and rainbows. Right. Sometimes you have to make real trade off conversations. That's what investing always is.
Preeti Bhattacharji:It's about looking at the getting the information, looking at your situation, and deciding what you want your trade offs to be. Mhmm. And so sometimes there are trade offs, for example, between your environmental and your social objectives. And I wouldn't be doing you any favors if I didn't call that out. So I do think that's often a myth for people who are so enthusiastic about the space.
Preeti Bhattacharji:They want to think there is never any trade offs, particularly between environmental and social considerations. And I'm often the buzzkill that says sometimes there are.
Grant Oliphant:Yeah. And I, I admire you for being honest because that, with them because that that can be a hard message to deliver. The flip side I suppose is that young people are in many respects driving this conversation, and I'm curious what you're hearing from the organizations you work with about how a generational shift is driving them About climate change or on any other front?
Preeti Bhattacharji:Yeah. I it's absolutely driven generationally. So we are on the brink of the biggest intergenerational wealth transfer in human history. And I think that's really driving things in in 3 ways. Number 1, that means the asset owners of tomorrow do not look or sound like the asset owners of yesterday.
Preeti Bhattacharji:They're asking different questions as investors, as personal investors, as donors, as people who just steward capital. They have different expectations of the markets. And so it's funny. I myself am what I affectionately call a geriatric millennial. And so I think I come from a data entitled generation, and Gen z is even more so where kind of the the reaction I get from students is, what do you mean I can't see my entire investment portfolio on my phone?
Preeti Bhattacharji:And it can't immediately tell me what companies are doing for better and for worse in a community? I can I can see everything else on my phone? I can't get that level of transparency that that it seems insane to this generation. And so number 1, just as asset owners, more transparency is expected. Number 2, this generation also has different purchasing habits.
Preeti Bhattacharji:So as you think about shifting consumer habits back to your question around financial materiality, future proofing your portfolio, gen z buys different things as you think about sustainable fashion, as you think about, non meat protein alternatives, as you think about electric vehicles, those consumer purchasing habits are really changing, which in turn is changing how companies operate, which in turn is changing how investable they are. And then the 3rd space, which I actually think doesn't get enough attention, is this generation has different expectations as employees. Especially, I mean, the labor market was so tight, particularly 2 years ago. We were all fighting for talent, getting, you know, top talent out of schools. And a lot of these recent graduates were very clear that they wanted to work at purpose driven companies, and they were willing to read between the lines around where the purpose was just lip service and where it was authentic.
Preeti Bhattacharji:I was actually in a really interesting job interview for kind of an entry level analyst where they had printed out a copy of our ESG report and marked it up and slid it across the table. And we're like, I have very specific questions I wanna ask you about this.
Grant Oliphant:I both love and hate that.
Preeti Bhattacharji:It was yeah. Honestly, it was really exciting to see. So I think this this generation is pushing things as asset owners, as consumers, as employees, and I only expect to see more of that.
Grant Oliphant:Yeah. It's exciting. Are you, are you seeing companies change as a result? Are the is the universe of investable opportunities increasing as a result of this?
Preeti Bhattacharji:Also a great question. Yes. It's the short version. I mean, company behavior is shifting. Company norms are shifting.
Preeti Bhattacharji:10 years ago, companies weren't making net zero commitments. Now you can't swing a cat without hitting a company that has made a net zero zero commitment. Whether or not they'll be able to meet it is a different conversation.
Grant Oliphant:Real or not.
Preeti Bhattacharji:Exactly. Whether and we could talk about what that looks like. Yeah. But even the language around this. I mean, I will say something controversial.
Preeti Bhattacharji:I think there's a lot of talk right now around greenwashing, and I think it's a really important conversation to be had. There's absolutely greenwashing in the market. We need to be careful and mindful around it. And 10 years ago, companies weren't even bothering to greenwash. The sheer fact that companies now even feel the need to pay lip service
Grant Oliphant:Yeah.
Preeti Bhattacharji:To green objectives is weirdly in and of itself a win because it signals a shift in norms that didn't exist 10 years ago. And so we gotta button it up. We gotta make sure there's accountability. We need to prevent greenwashing. But the sheer fact that companies feel the need to fake their green credentials now is in its own way a win.
Grant Oliphant:I'd never thought about that, but you're you're right. I mean, that is a a strange kind of progress, but we'll take it. It does, it at least changes the nature of the conversation, and I, you know, what we're seeing on the ground here is, among young people in this community, a really heightened interest in working for social benefit corporations, purpose driven organizations. They wanna do well, but they also wanna work in an environment where they feel like they're doing good for their community and for the values that they embody. So, I do think that's driving a change, and it's interesting that you're it's more important that you're observing it because you're you're looking at it nationally.
Preeti Bhattacharji:Yeah. We're we're we are absolutely seeing that trend nationally and internationally too, by the way. I mean, certainly, we're seeing that in the United States, but my colleagues in Europe will attest to the fact they're seeing it even more, even more aggressively, even more, loudly. And in Asia too. I think there's new wealth in Asia where, again, the demands are changing.
Preeti Bhattacharji:I I cannot stress enough that the face of wealth is shifting, and that's changing the conversation everywhere for investors and donors alike.
Grant Oliphant:So how much of this is driven by the cold hard realization that the old mechanisms of change aren't working anymore. You know I look at this a lot through the lens of our work as a foundation, and we are privileged to get to do an amazing job of working to change our community every day, and the traditional lens on that would restrict us to the $50,000,000 or so in grant making that we do a year. And that number sounds large until you actually compare it to anything that we're trying to affect, and then it's trivial. So you know we try to use that strategically to leverage other resources and affect change in other ways which is the traditional foundation playbook. The other thing we try to do is also affect policy which is another part of the foundation playbook, and everybody who cares about any social issue is work on policy all the time because they're they know that that's how you achieve change at scale.
Grant Oliphant:But we also know that that system isn't working the way that we once hoped, and we see these capital markets that are still contributing harm at a significant level. So are people coming to this work because they're just realizing it is the unless we learn how to align our investments in the marketplace with our values, we're not going to ever achieve or get where we wanna go.
Preeti Bhattacharji:I think there's a version of that. I would say maybe I'm never an optimist, so I can't believe I'm about to say this more optimistically, but,
Grant Oliphant:I didn't think I was being negative.
Crystal Page:But No. No.
Preeti Bhattacharji:No. Not at all. But I actually I I think think the challenges that foundations grapple with when you think about systemic poverty, when you think about climate change, when you think about these deep and complicated challenges, they only get solved by using every tool in the toolkit. And so to your point, I actually think, grants still play a role. Policy work still plays a role.
Preeti Bhattacharji:Advocacy work still plays a role. Everybody plays a role. I think what you're seeing is a recognition that historically, most foundations weren't actually thinking about their investments as a tool to use here. And so it's just yet another tool in the toolkit. And these are such intractable problems.
Preeti Bhattacharji:They will not get resolved unless we are deploying the full strength of all of our resources. And this just feels like a resource that had been latent that we're now all figuring out how to tap more productively.
Grant Oliphant:I I appreciate that amendment. I I like that I like that answer, and I think it's consistent with what we see in terms of of our work. You mentioned earlier that one of the things you try and educate young people about is that this is a world of imperfect choices. All of life is, but the marketplace, seems especially so. And there is I think sometimes this is important for this discussion, there is a tendency to view this as almost a binary path where you just have to pick the right investment and you will do the virtuous thing.
Grant Oliphant:And on almost any front, you recently walked a group of us through this, an exercise in understanding choices on almost any front you're faced with a set of imperfect choices. So how do you get people excited about making better imperfect choices?
Preeti Bhattacharji:I'm so
Grant Oliphant:And is my characterization of that fair?
Preeti Bhattacharji:Absolutely. So something I often tell particularly students is if you really care about the impact of a company, you'll probably look at its supply chain, its operations, its product. You'll look at its environmental footprint. You You'll look at its social footprint. You'll look at its governance footprint.
Preeti Bhattacharji:You'll map out all the data you can find about all of those things. And then if you only want to invest in companies that have a perfect track record across all nine of those dynamics, your investable universe is 0. You end up with 0 companies you can invest in. And so what do you do when faced with that? Well, you can throw up your hands and you can say, well, I'm paralyzed, so I'm just gonna buy the S and P 500 and call it a day.
Grant Oliphant:And just never look at what's happening.
Preeti Bhattacharji:Exactly. Never never ask the question again. Or you can take a deep breath, and roll up your sleeves and say, okay, what happens next? I'm actually gonna look at all of this analysis.
Preeti Bhattacharji:I'm gonna pick my trade offs. I'm gonna take a stand, and I'm gonna decide what happens next. Mhmm. Because you have to invest in something. That's that's the hard truth as an investor, as an asset owner of any kind.
Preeti Bhattacharji:Your money's going somewhere. So unless you stick it in cash in your mattress, and even then that has implications, your money's gonna go somewhere. So as an asset owner, I try to remind people and rally people around the fact that you you can know what you own. You can own what you own. Back to data transparency, why wouldn't you wanna know what you own and be able to ask those questions?
Preeti Bhattacharji:Because opting out isn't really an option. So in a world where you have to be opted in, do your best to be opted in to the best of your ability. And I think usually that gets people activated As a very tactical exercise, the other thing that often gets people activated is to say, without even moving a dollar, without doing any impact investing, again, just acknowledging you're already invested in things, let's pause and review what you're already invested in. And inevitably, that review of knowing what you own, of actually looking through the inventory of what companies you own inspires feelings, inspires reactions. I've never met somebody who went through a list of their investments in detail and didn't say, oh, I didn't know I owned that, or, oh, I'm not sure I wanna own that.
Preeti Bhattacharji:And that's often a way to get people activated, because once you see it, you can't unsee it.
Grant Oliphant:I was actually going to follow-up with a question. You may have just answered it, but the, you know, one of the things that I think we're all challenged by in this space is the the true cynic who just responds by saying, this is all politics, you know this is, this is a concern of the moment, It's not real. When you're confronted with that, I imagine it's hard to argue with it, but how do you respond to folks like that? Do you show them what they hold in their portfolio and see if it's really what they want?
Preeti Bhattacharji:So I actually start by leaning into the criticism and saying, I think it's legitimate to say, if you're just buying and selling stocks in the secondary market, what impact does that have? Mhmm. If if I have a stock that my that I sell for $10 and somebody else buys for $10, does that actually affect the company in any way? What what effect does it have? But then I go one step further to remind people that when you buy and sell stock, in particular, you're not just buying and selling a piece of the company.
Preeti Bhattacharji:You're buying and selling a vote with the company, a voice with the company. You get to vote your proxies. You get to file shareholder resolutions. There's a whole world of corporate engagement that's tied in to buying and selling stocks. And that's often particularly in the public markets, where impact and change happens.
Preeti Bhattacharji:And so, certainly, a cynic might just look at a list of companies they own and say, oh, what does it mean? What does it matter whether or not I buy or sell those companies? The company doesn't care whether I own it or somebody else owns it. Mhmm. They're not impacted.
Preeti Bhattacharji:And that's true, unless you're actually using your powers as a shareholder. And once you talk about proxy voting, once you talk about showing up at these meetings and actually having a voice and having a say, it becomes a very different conversation. And I've been in plenty of meetings with corporate executives who are, who track very carefully who their shareholders are. Because they know some shareholders are gonna show up at those annual meetings and cause a stink if if their practices run afoul of what their shareholders want. And so that to me is where you see very clear impact in the public markets even when you're just buying and selling stocks.
Grant Oliphant:I really appreciate that answer, because I think all of us understanding the complexities of these issues, also wanna be sensitive to the folks who are cynical about it, and and figure out how to meet them in a place where we can talk about it. And I I think you've just modeled that, so thank you. When I think about San Diego and the work that the Prebys Foundation is doing here, it's certainly about a set of issues, it's about healthcare, it's about young people, it's about the arts, it's about medical research, but there's a higher order set of things that we care about, and they emerge from some of the unique things about this community. It's got stunning assets in the life sciences, and tech, and innovation. We are the most biodiverse county in the country.
Grant Oliphant:We have, a a staggeringly high, representation of indigenous tribal lands here in San Diego. We are a tri national region not just a bi national region because of the indigenous population We are an amazingly vibrant border town with Tijuana just across the border that really Tijuana and San Diego are a coherent super region in many ways. Not surprisingly flowing from that a remarkable convergence of different types of people from all over the world that in no small way represents the future of America and where the rest of the country is going. So there's a lot going on here, and it's a town that really doesn't yet see the awesome potential that it has to model a new path forward for the country. And I truly believe it's one of the reasons I came here is I truly believe this is a place that can be one of the places in America that models a new path forward. To get there we're going to have to figure out how to create a community where everybody belongs, and our view of community well-being is built on this notion that everybody gets to belong here and feel like they do.
Grant Oliphant:Everybody has a real opportunity to succeed here, so there's meaningful work and meaningful opportunity to pay for your family and support your family, and send your kids to good schools, and all of that. And then purpose, you know that you have a reason to get up in the morning that feels like you're doing something relevant and important for yourself, for your community, for others, for what however you define that. Why is this sort of investing relevant at that level? Or is it?
Preeti Bhattacharji:I'm pausing because first of all, you make me want to Zillow properties in San Diego. That sounds extremely appealing.
Grant Oliphant:It's a pretty amazing place.
Preeti Bhattacharji:I I absolutely think it's relevant at that. I mean, what you articulated is a vibrant, beautiful picture of what a community can be. Particularly an American diverse community can be. And again, I keep coming back to the fact that none of us can build that type of community without using all the tools in the toolkit. There needs to be political capital.
Preeti Bhattacharji:There needs to be philanthropic capital. There needs to be traditional investment capital to create the world you just described. And sometimes capital, going way back to my origin story in this space, capital can build a community and capital can destroy a community. And if you aren't being deliberate about whether your capital is creating or destroying, often the default is destroying. Mhmm.
Preeti Bhattacharji:And I think we need thoughtful, productive investors to help build the type of ecosystem you're describing in San Diego and throughout the country. It needs to be a deliberate effort.
Grant Oliphant:Thank you for that. Before we wrap up, I have to ask this question because I think it's such you know philanthropy so well, and it's such a, it's an important subtext for anybody interested in foundations and philanthropy. There's a debate in America about the nature of philanthropy, and it's usually targeted in the current debate at highly wealthy people who are seen as using philanthropy as a way of atoning for their past sins, or or greenwashing their reputations, or, or doing some small thing to to make up for harm they may have caused to make their money, and there's a criticism around not paying taxes as a result of that. What I find unfortunate about that completely correct criticism is or at least off often correct criticism is that all of philanthropy gets caught up in it, and what should be a conversation about people who are currently in the process of building their wealth and figuring out what to do with it, instead captures the entire landscape and a criticism around not caring and just using the practice of philanthropy to cover for for these presumed sins. Do you encounter this argument at all?
Grant Oliphant:And and and when you're talking about impact investing or mission related investing, do you how do you help people understand that that's not just, being captured by this rich elite trying to cover for what I just described?
Preeti Bhattacharji:So we certainly hear that that argument as well. And I think one of the things that gives me hope in the face of that argument is all of the foundations like Prebys that are being really thoughtful about about their privilege and about allocation, not just of money, but of power. We were having this conversation earlier about acknowledging the power that comes with philanthropy. Facing it, naming it, and thinking of new structures to reallocate the power alongside the money. And there's some really thoughtful, I think, cutting edge communities of practice and foundations that are, thinking about new investment committee protocols, new investment processes that face that criticism head on and say we're gonna have community led investment committees, for example.
Preeti Bhattacharji:We're gonna have community led investment processes So that we aren't just perpetuating some of the power structures that have been, but are creating the power structures that as we want them to be. Which I think gets us closer to the vision you outlined of a place like San Diego where you can have broad based prosperity. And I think that's core to the vision you outlined.
Grant Oliphant:Preeti, I have loved this conversation. I really appreciate, first of all the opportunity to get to work with you on this agenda for our work in San Diego, and our investments wherever they may go. And I wanna thank you for sharing your thoughts with us here today. Is there anything you wanted to add?
Preeti Bhattacharji:I think the work that you're doing is impressive in part because you're stepping into the unknown. And I I don't think organizations get enough credit for stepping into the unknown. I think that's exciting and brave and hard. And we were just chatting about the fact that sometimes that means failing out loud and failing in public, and that in and of itself takes bravery. And so, I just I applaud that, and I'm here to support that.
Preeti Bhattacharji:And I'm thrilled to be a part of it.
Grant Oliphant:Thank you for pointing that out. I'm very lucky to have a brave team and a brave board, so it's a pleasure. Really enjoyed this conversation, and I look forward to where it will lead us.
Preeti Bhattacharji:Thanks so much. Thanks for having me.
Grant Oliphant:Thanks for being here.
Crystal Page:Wow. I remember being in the room when Preeti did a a learning for a Prebys Foundation, and I was like, this person is amazing. They have to be on the podcast. That was amazing, Grant.
Grant Oliphant:Well, I think I've you know, let's give credit where credit is due. It was your idea to bring her here, and she is able to break down these very complicated concepts very easily and help us understand them, and she is talking about a subject that we all should care about, not just a foundation.
Crystal Page:Well and for me, I think really what stood out is here's this woman out in the world trying to help communities, and then a market crash happens. And this thing that didn't feel relevant to them is directly impacting
Grant Oliphant:them. Let's let's say a little bit more about that background because I think that's such an interesting point. What stood out to you about that?
Crystal Page:I mean, what stood out to me is, right, she's Preeti really wanted to just go out and organize with communities and support them, and here's this market crash that's pulling them down. I had a similar, feeling not quite the same, but when I went to grad school, I graduated during the writers' strike. So a bunch of us were out of jobs and things.
Preeti Bhattacharji:And so
Grant Oliphant:What what perfect timing.
Crystal Page:Right? And so I just feel like, and this was, like, the 2008 ish writers' strike, but I just feel like sometimes we think forces have no impact on us, and they totally do. And this drove Priti to jump into a whole different world of work and economy because she wanted to understand how is this shadow market that doesn't feel relevant all the time directly hurting people.
Grant Oliphant:Yeah. It's, I it is it is actually helpful for everyone to remember that we're shaped by forces beyond our control. And in her case, she came into this whole arena of work because of timing, and and then what opened up for her in terms of her interests, and I think all of us who care about this area of Impact Investing are grateful that this is the where her path led her, because she's very good at helping us understand the concept.
Crystal Page:And did you do impact investing at your last foundation?
Grant Oliphant:Yeah. We talked a lot about impact investing, and we did some. The Prebys Foundation is doing more, and we're very, clear and committed about how we wanna do that. Let me let me just say a couple of words about how this works for a large institution. You know, often, historically, what large institutions think they have to care about is only maximizing the financial return of whatever investments they're controlling.
Grant Oliphant:And in fact, if you're on the board of a large institution, that is your fiduciary duty. You actually have to pay attention to that. In the past, what that set up was kind of a false decision between investing for the sake of returns, and investing for the sake of advancing the mission. The world has gotten a lot more sophisticated in part thanks to people like Preeti, about how to bring those two considerations into alignment. It's no longer true that in order to care about our our fiduciary duty, we have to disregard our mission.
Grant Oliphant:We can actually be thoughtful about the ways in which we align, the investments we make to advance our impact in ways that we care about without sacrificing financial return. And and that's the gold standard here, you know, this is what the whole I think anybody in any position of institutional investing authority is wrestling with at the moment. How do I do good with this money beyond just making more money?
Crystal Page:And the piece that she named about the different screens, right, there was the, people who wanna divest from oil or people who wanna invest only in social justice investments. Right? She talked about these different screens, so it seems kind of, complicated. How what did you take away from her discussion of the different approaches to this type of impact investing?
Grant Oliphant:Yeah. Well, it sounds complicated until you think about it in terms of life. Okay? So, you know, just just think about how you tackle any other problem, and it's the old classic, how do you eat an elephant? Although I don't applaud eating elephants, is one bite at a time.
Grant Oliphant:Right? And so what she's laying out is the bites, the the steps or considerations that you go through in thinking about how to do this. But as with anything else, when when an entity invests money, it does it piece by piece. It does it deal by deal or investment by investment. And that's what I found is that, rather than trying to think about it all the the time as, oh, we've gotta deploy all this money all at once.
Grant Oliphant:No. What you have to do is find deals that make sense in terms of the work that you're trying to do, and use the methodology that Preeti described, so that you can actually begin to accomplish some of your social or environmental or economic goals, in addition to your financial ones.
Crystal Page:And I wanna acknowledge the elephant in the room. Please don't eat the elephant.
Grant Oliphant:Yes. I I agree with you on that.
Crystal Page:But I really wanna know, like I'm thinking about my activisty friends. Right? Like, we we know we're in a capitalistic society, so I'm gonna go there.
Preeti Bhattacharji:Right.
Crystal Page:This is a tool in the toolbox of capitalism. But but how do you make sense of that in a world where we wanna have social safety nets and all these other things? Like, I just my 40 year old self is like, this is capitalism. We're using the tools, but also how do we build for that tomorrow that's more inclusive?
Grant Oliphant:Yeah. Boy, there are so many ways to answer this question, but let me go first of all right at the capitalism question. I'm a fan of capitalism. I think what a lot of people struggle with is the legacy of the last few decades of runaway unfettered capitalism that we've experienced in the United States and in part globally, where the notion has been in the, you know, in the in the famous phrase that, the purpose of business is to make money, the purpose of business is business. You know, there was a moment in time where the historical role of of corporations as citizens of the country or as citizens of their community, that social bond got broken.
Grant Oliphant:And and and then it was, you know, no holds barred off to the races, and we saw some of the excesses that we've seen. I think it's possible to get back to those bonds in part by disciplines like impact investing, in part by society setting expectations for how companies behave, and shareholders setting expectations for how companies behave. Now you can view that as naive, but the the reality is that society has set expectations for capitalism before, dozen other parts of the world. We already do in this country in some areas, and we can do it again, and we can do it in a way that harnesses the best of capitalism, which really is, a system that incentivizes people to keep innovating and keep inventing, and for entrepreneurs to keep driving. That part's good.
Grant Oliphant:We want that. You know, we want that in our society. So that's one way I would answer this question, Crystal. The other is I would just say, you know, in the very simple world in which we're dealing with, which is not a simple world at all, but for foundations, you know, so often the debate has been, oh, you know, you should you should just focus on maximizing your returns and your investment because that will give you more money to do good with the rest of of of what you give away. The flaw in that is if you are investing in ways that are contrary to what you care about, then you're undermining yourself at every turn.
Grant Oliphant:So we actually have to go through this process. Think for example if what you care about is climate, many of us do. If what we care about is climate change and we're worried, you know, a community like ours should be worried about what happens to our community in a world in which climate change is accelerating. If if we're caring about that, but at the same time, we're investing deeply in fossil fuel production, then we're undercutting anything we might be doing on the grant side. So what what we're seeing here is an a a call to alignment around our values.
Grant Oliphant:That alignment around our values will make the system of capitalism better. And there isn't an alternative that history has yet shown us that, is better than than aligning values around a capitalistic system.
Crystal Page:Well and I think that's helpful because it gives me the distinction between greenwashing and what we're trying to do, which is an alignment of values. Right? You're you're right. I think we've all bought or shopped at some place whether with the knowledge or without of some company that, claims they care about climate change and you find out they're making all their money off of oil or or whatever the latest greatest tool is. So I think that's helpful for me to understand as someone who, you know I do have a 401 k.
Crystal Page:I do have all these different things, but also the work of the foundation in part is to use the trust for the good of San Diego. And so I appreciate you kinda walking me through these complexities, and I think that's what Priti Priti probably does for her clients every day.
Grant Oliphant:Well, you know, I think that I I think what what you're seeing with the fact that there are people like Preeti with investment organizations, increasingly these days is there's a demand for this. More and more shareholders, stakeholders, customers, clients, call you call them what you will. Many of us are clamoring for this type of change, and we wanna see this type of values alignment. And I actually think that we are in the middle of a really big sweeping societal change, and I love the idea of San Diego helping to lead that. You know?
Grant Oliphant:It's we actually have the capacity in this community to, think much more aggressively about impact investing among the large institutions here, and to have those large institutions in San Diego be in the vanguard of communities that are using Impact Investing to change the world in ways that are consistent with their missions.
Crystal Page:I think that is the, takeaway of the day. Right?
Grant Oliphant:Yeah. And I, you know, I I I I also appreciate, Crystal, you bringing up the the concept of greenwashing because we're also seeing because there is so much demand, we're also seeing that, many companies are willing to pretend, or to to do something that appears on the outside, like it's environmentally sustainable or positive, and then that turns out to be undercut by everything else that they're doing. And, yeah, that's a tension that is as old as time. By the way, it's inherent not just in capitalism or in companies, but in human behavior. And and part of what we have to do is build safeguards against that.
Grant Oliphant:We have to hold organizations accountable. You know, I recognize with you and I sitting here right now talking about this as important to the future of our foundation, people are gonna come back in a year or 2 and see, well, where are you along that trajectory, and are you living those values? And they should. I mean, that is that is part of the process that we're all signing up for. And the antidote to protecting against companies that greenwash is for people to call them out, and for that behavior to be acknowledged for what it is, and for organizations to change.
Grant Oliphant:So I'm I'm the fact that it goes on is not surprising. I'm hopeful in San Diego encourage a new path for the country, where more and more investments are made with the end result in mind that advances our mission.
Crystal Page:I love that, and I look forward to continuing to talk about it as we go forward.
Grant Oliphant:Excellent. Thank you so much, Crystal.
Crystal Page:Thank you, Grant.
Grant Oliphant:This is a production of the Prebys Foundation hosted by Grant Oliphant, and co hosted by Crystal Page. The program is co produced by Crystal Page and Adam Greenfield, and our and our new theme song is by mister Lyrical Groove, a local San Diego artist. Download episodes at your favorite podcatcher or visit us at stop and talk podcast.org. If you like this show, and we really hope you do, the best way to support it is to share, subscribe, and review our podcast. Thank you for your support, your ideas, and most of all, for listening.
Grant Oliphant:This program has been recorded at The Voice of San Diego Podcast Studio.