Cliff Prior
Cliff Prior is the CEO of the Global Steering Group for Impact Investing – the independent organization driving a rising global movement toward impact investing in favor of all people and the environment.
Cliff was previously CEO of Big Society Capital, the wholesale market developer and investor in social impact in the UK, of UnLtd, the British foundation for social entrepreneurs; of Rethink for people affected by severe mental ill health. He has also worked in social housing, healthcare, elder care, and homelessness. Cliff has co-founded social companies and served as a government adviser and regulator in a number of social issue areas
But if you try to do major environmental work, which almost at some point is going to create harm for people, changing jobs, changing homes, etc., you need to attune it to the circumstances and mores of a country. Without that, you're not going to get climate measures through
— Cliff Prior
Interview transcript
To start off, could you share a little bit about yourself? How did you get into the impact space and what is your current role?
Sure. So my starting point is actually doing something completely different. My journey includes biochemistry, chemistry, crisis intervention, counseling, social housing, health and mental health, social entrepreneurship, and society capital. I have experience with wholesale impact funds and market building for global impact. Along the way, I have started some social enterprises of my own and participated in quite a lot of government and advisory programs, such as healthcare commissioner and medicines commissioner. Getting into this field, I joined Unlimited, which is the UK social entrepreneurship support agency. That job was perfectly designed for me because it aligned with my previous experience. I worked there for nine years, during which we pivoted from supporting social entrepreneurs to using our skills and systems to help many other organizations support social entrepreneurs. We created a network of social entrepreneur support agencies in around 40 countries. The successful social entrepreneurs start making money and needing angel investment and venture capital, so it wasn't a totally surprising step to become the CEO of Big Society Capital, the social investment agency for the UK. I was involved with the global steering group from its start in 2013 and did a number of reports for it. I was hired as the CEO for them. In retrospect, it all makes sense, but prospectively it didn't make a lot of sense.
Thank you so much. I'm sure you get asked this question a lot, but what does "impacts" mean to you?
Yeah, so initially I found the word "impact" uncomfortable. To me, impact means falling down the stairs, which is not a good thing. However, I understand that at a Blagica meeting in 2008, the pioneers of this field decided to use the word "impact" instead of "social" because in America, "social" is associated with communism and could lead to being chased out of town. Over time, the meaning of words is in their use, and now people are comfortable thinking about impact as the positive or negative effect of actions, whether they are financial, corporate, or political. Impact captures both the positive and negative aspects of actions or interactions. Every year, there are new nuances to this, and this year, transition impact is becoming more important. For example, if you want to put social homes on brownfield land, you will need to dig up some nasty stuff in the first year, which is negative impact. However, once you have cleared the land, you can have a positive impact. Therefore, you need to consider the transition element. Transitions are important in the areas you are discussing. Impact refers to the positive and negative effects of actions or inactions, regardless of how they are taken.
That's very helpful. And you made a good point about negative externalities. In many projects, they are not taken into account or priced in properly.
Yeah. I think in the early days, people were focused on what the positive impact they intended to have was. This is evident in the Virus Plus system, which has been improved and advanced over time. However, in the early days of the IRS, it was all about your chosen area of positive impact. What about the other things that you're doing? Now, when we look at more sophisticated sets of standards, like the ISSB programme, we're looking at both the positives and negatives, as well as increasing scope. Scope three is the big thing this year. It's not just about what your company is doing, but everything along the value chain that comes to your company. It gets more nuanced every year, as it should. We will probably look back and laugh at some of the things we did in the early days. But you know, this is not much more than a 20-year project, and the amount of change in that period is really extraordinary.
I also wanted to follow up on what you mentioned about inaction. How should people evaluate the cost of not taking action?
Yeah, so there's a governmental piece about this. And we've just seen the latest IPCC reports. You can see in them the consequences of inaction. If you start reducing your carbon emissions this year, it will be a much bigger deal than if you wait until next year. Inaction has an impact. I think people mainly associate this with governmental policy, but then you look at what's happening in mining. A lot of mining is harmful to the environment. Most of the big mining companies are trying to improve their practices, but what are they leaving behind? What's the impact of not remediating the land they've measured and looked at? So, as I said, it will continue to evolve.
Going back to one of your earlier points about transition impact, could you elaborate on that a bit more?
Yeah, so there are certainly a number of areas where you need to do some very nasty stuff in order to achieve what you really want. An example of this is turning brownfields land into social housing or remediating it into green space. Transitions are also a much bigger stage. For example, the Just Energy Transition projects (JET) may be familiar to you.
I’m unfamiliar with them but will look them up.
Yeah, so this came from the "You Get My Years" initiative in 2021, which was a UK G7 and G20 effort focused on energy transition programs. The first program was focused on South Africa, where global North countries would provide billions to assist in the transition from coal mining to clean energy. It was understood from the start that this could not just be seen as a financial or corporate mechanism, but also needed to be considered in the social dimension. For example, in South Africa, there are about 160,000 coal miners, with 130,000 of them in one province, which is the economy of that province. Due to this concentration, social factors like reskilling and rebuilding the economy of that province need to be considered alongside the transition to clean energy. Just Energy Transition Programs (JETPs) take into account climate, socio-economic, and community voice. Climate action is essential and already affecting vulnerable populations, but without the will of the people, it won't happen. The JETPs require community voice, as seen in strong labor unions in South Africa. Without their agreement, the necessary change won't occur. The JETPs have been implemented in Indonesia and are planned for Vietnam and West Africa. They aim to transition from coal to clean energy, remediate the land, and consider reskilling and rehoming of people, with the people having a strong voice in the transition mechanism. This approach is much bigger and more diverse than just reducing carbon, and requires a sophisticated, multi-stakeholder approach.
Yes, it's probably the most sophisticated and challenging program. And let me tell you just how challenging it is: it hasn't even started yet. It's been two years, and there are lots of plans, but not much action yet.
Diana and I will arrange a gathering for some of the experts we've met, as well as the partners in this project. An amazing biologist will speak to us about biomimicry and its impact. Our assumption is that we can learn a lot from nature when it comes to effectiveness because it has a lot to offer.
This is a very new and expansive area, and somebody you should definitely consider including is Andy Kuper, spelled K-U-P-E-R. He is the CEO of LeapFrog Investment and has taken a digital technology approach, particularly in Africa and Southeast Asia, to reach hundreds of millions of people. We need to think big and not just focus on small interventions and steps. We need a magic wand to create real change.
And that's a really good opportunity for me to ask the second question, which is, obviously, it requires a ton of coordination, even before the execution, to get people aligned on what they want to do. Obviously, with the peace of it being a little bit transitional, there's a trade-off that people have to get over. How can we encourage or empower people to have these collaborations even though, in the short run, you might need to take a hit?
Yeah, there have been some discussions about the impact and financial aspects of online platforms recently, and how some of the new regulatory systems are blocking them. Because you have to get over that hump of doing some unpleasant things in order to get to the good stuff, the moment you get to the unpleasant stuff, you're kicked out of being an impact player. There are some really interesting discussions coming out of this. Now, let's talk about Big Society Capital. Big Society Capital started off trying to be a sort of VC investor for social impact, but after a couple of years of that not working, they took a new approach. The new approach was really solution-based investing. So, the starting point is: is it investable? If it is investable, what is the contribution that investment can make? What else do you need to make this investment and this program work? The first really full-on expression of this was Fair By Design. Fair By Design is a poverty alleviation program in the UK for people on low incomes. The Joseph Rowntree Foundation, which works on understanding poverty and how to address it, came to Big Society Capital saying, "What can we do about poverty?" Our CIO identified the poverty premium, which is areas where people on low incomes find themselves paying higher prices for basic goods and services. For example, if you can't afford a car, you have to go to the local corner shop for your groceries, which will be more expensive than going to the supermarket. If you can't do direct debit for your electricity and gas, you have a key meter that's more expensive than going online. There's a whole set of these things. As our CIO said, some of these higher prices are legacies of older-style approaches. For example, back in the day, if you had a key meter for your electricity, somebody actually had to come around physically and take the coins out, which was genuinely expensive. Doing it online is not very marginally expensive. So, there was something that you could reduce, and he identified a small number of these. We then got a research agency, Bristol Memory, to examine the size and scale of the different poverty premiums, so we could look at which ones were worth putting investment into. There will be things that were very marginal, so let's focus on the bigger ones, and where there was an investable proposition to remove that premium.
That was the sort of investment piece from my point of view, and I was thinking that listening to other things is necessary to succeed. It needs an eye on government because many of these areas are subject to government policy changes. Unless we're aware of that, we might be going down the road with investment policy changes that could fall apart. But we also felt that we needed to make this something that would be in the public eye to get support, to get wider political support, and to get other poverty-oriented organizations involved. So what we ended up with was this core issue of poverty and premium surrounded by investors, political engagement, communications research, and other support. At the time, we thought this was probably the riskiest investment we had made, but it has been hugely supportive and very successful. I think one of the startups is very close to unicorn status now. So it's really worked, and essentially, this was a very pure example. But Big Society Capital now does this kind of thing regularly, trying to understand who they need to work with to achieve their goals. They ask themselves if investment is useful for this, and if it is, what kind of investment and what other parties are needed. I'm really pleased with this approach and how they've done it. It's not just exciting capitalism; other people are doing it too. See if you've come across them very early stage and they do this sort of, get a crowd around an issue. So, they had mobility for aging society. They will bring in researchers, communications experts, and health experts, as well as investors. This is the last one that I went to, which was pre-COVID, so it may have changed quite a bit since. But, there were over 600 people in attendance, covering just about every aspect that could assist in these missions (they call them missions, rather than anything else). So, I think it's certainly worth looking at Fair by Design in Big Society Capital. It's also worth looking at Excited Capital's approach online, generally, and zink.vc. This sort of solution-based investment is what you're trying to say in that multi-stakeholder approach.
Yes, that's very helpful. In your opinion, what made the example so successful? How do all these different players come together to create empathy and connect with the public to help them understand what needs to be done?
Yeah, because I mean, things originate from the starting point and can come from a number of different places in that survey design. It was a poverty-oriented foundation. But in other cases, it may be investors with a new angle, a new approach. It may be the government saying, "We're going to put effort into improving regulations and streamlining systems." You know, it can start from a number of places, but then it's really about thinking, "Don't just think of yourself as an investor. Think of the solution. What is required to solve this particular problem?" Yeah, which is not 100% of what Big City Capital does. But even in an area like early-stage venture, you would often have quite a mix of different projects coming along. What a couple of the team did on early-stage venture was research UK and EU examples to look at one of the correlates of success for early-stage venture capital. They really pinned it down to two, one of which was almost impossible, which is being the peak organization. If you're the peak organization, and your first round is really successful, more investors want to come in for the second round, and more candidate companies want to come in. So it's even more successful, and it just drives up more and more success, and everybody else doesn't get a look in. It's a brutal approach. But the other approach that we saw that was successful was being highly focused and having a laser lens, because then you could do things like bring in research, bring in angel investors who were really interested in that field, bring in policy, bring in communications, bring in anything that was necessary. And one of the key things there was always to not just wait until you needed to get the next stage investor when you had your early-stage candidates coming to their next round. You actually brought in the next round investors from the start, so you overlapped as things went further and further. These were really successful approaches. Anyway, I'll stop there.
Great, thank you. Going back to the earlier example of the projects in South Africa, you mentioned that it's super important to empower local communities and ensure that they have a say in the process. Based on your experience, what's a good way to engage with local communities?
Yeah, so I think there is an overall approach to climate, socio-economics, and people with a voice. How this works in different countries is not going to be a cookie-cutter thing. South Africa is a highly consensual country with strong labor unions. Indonesia does not have strong labor unions, while Vietnam is still very government-dominated from communist times. You're going to get different angles in different circumstances. It's not going to be an easy cookie-cutter. But if you try to do major environmental work, which almost at some point is going to create harm for people, changing jobs, changing homes, etc., you need to attune it to the circumstances and mores of a country. Without that, you're not going to get climate measures through. That's what's happening. If you look at the IPCC, why is it that when we're not on the downward track on carbon, it's because the population says, "You can't do that." They say it to governments, and then governments sign proposals and don't honor them because they know that if it's a democracy, they won't win the next election. And if it's an autocracy, there will be a riot. In France, there will be both. That's just how France is. So, of course, there is a strong moral argument, but there is also a very practical argument that you're not going to get climate change measures without the will of the people.
This brings me to a follow-up question on scalability and contextualizing these projects locally. How do you strike a balance between the two? After speaking with many people for this project, I have heard that multistakeholder projects are often difficult to scale because they are very localized and contextualized.
I would love to hear about your issues. Scaling is a very real problem, and there is a UK example right now of some parts of the country ending up in droughts regularly. There is a proposal to build another mountain reservoir, but people who live there will lose their homes. They have lived there for centuries, so this is a difficult situation. The scale issue is a really big one, but it's not new. For example, in Wales, which used to be a huge center of coal mining, there are many slag tips, which are mountains of rubble that came out of the mines. There was a terrible death toll when one of those slag tips collapsed and fell into a school during a rainstorm, killing many school children. After that, there was much stronger remediation of the land to prevent it from happening again, but it's still a challenge to make it nature-positive and a nice place to live. So, there are challenges to doing big programs in some areas, but it's a positive thing overall. For instance, if there has been overfishing in your local coastal areas, people may be losing their livelihoods as fishermen. If you put wind turbines in, the same skills are required because you need to maintain them. You need people who are good at bookkeeping, captains, and an industry to support and repair the boats. This switch from climate harm to climate and social benefits can be a win-win situation. However, there are definitely places where it is going to be harmful to populations. Looking forward to 2030, at the current rate, it will be very obvious in, for example, the Sahel, where tens of millions or even hundreds of millions of people may have to relocate, as well as in parts of India. Some of the Deep Green Climate people say that it's only when it starts really hurting people that they will take the action that's needed. Let's hope we don't have to go there. But there are some areas where we need to make changes. Many experts think that the only solution to the extent to which people are saying no to essential climate mitigation measures is going to be technology.
And yeah, I was at a conference yesterday and heard about some of the latest technologies. It's not a question of whether technologies can solve some of the tricky areas where there's social unrest, but rather how quickly they can be scaled. For example, solar panels have been around for about 20 years and now cost less than 10% of what they did 20 years ago. However, we don't have 20 years to wait. We need a radical change in the development process of promising new technologies for climate measures. Sorry, I'm getting on my soapbox now.
No, it's good, because my next question was actually about technology as well. What kinds of technical interventions can create a positive impact? What are some interesting examples that you heard about at the conference yesterday?
Yeah, so I think the big four positive areas that were discussed yesterday were energy, mobility, circularity, and carbon accounting, with less focus on food and agriculture, buildings, manufacturing, and greenhouse gas removal. Unfortunately, those less popular areas are the bigger climate challenges. Buildings, for example, contribute 40% to climate change, while transport contributes 15%. So, it's a significant issue. One of the speakers was asked about the new interventions that are coming in, which are not necessarily in the most important areas and are not ready for mass use. The speaker suggested that we need to do two things. First, we need to focus on high-value, moonshot ideas, such as nuclear fusion, and put our energy, research, and government support into that. Second, we need to look at new technologies that can help with the transition to a low-carbon economy by 2030 at scale. This way, we can bifurcate the steady head, which will deliver by a set date, and the moon shots, which are really big ideas. Whether this approach is right or not depends on the sector, but many jurisdictions, including the UK, encourage knocking down old buildings and constructing new ones, rather than renovating or remediating existing buildings. Additionally, the Building Regulations in England assume that the country is cold and requires insulation, which is not always the case.
Oh my gosh, yes! I was in London last summer and, obviously, with no air conditioning, it was very challenging for me. I am used to having AC because I am based in Hong Kong.
If there's no way to continue without AC, what are people going to do? Nuclear fusion could be a solution for providing AC.
Yes, it is really bad. As soon as you step onto the streets of Hong Kong, you feel the hot air, which is quite uncomfortable. This leads me to my next question: How can we test out these moonshot ideas? How can we pilot them?
Well, I mean, you know, some have been worked on for some time; nuclear fusion has been worked on for decades. And it's only now that it's starting to make progress. Similarly, there are efforts to develop transportation with zero electricity loss at room temperature. Sorry, my brain is too tired today to remember what it's called.
Currently, this applies to train lines, for instance. You run on a train line with room temperature and magnetism, without touching it, resulting in almost zero loss. I can't recall the term for this phenomenon, though.
Yeah. Yeah. That's good. Yeah. So that's another moonshot that's pretty close. Now they've got it up to around 15 to 20 degrees Celsius, which is just amazing. Absolutely amazing. They, I mean, think of the more steady Eddie's. For example, the new range of electric battery storage and solar power are way more efficient and less reliant on mass mining. I mean, when you look at countries like Congo and Mongolia, just how much of the land has been caved away for lithium, and we're really only using around 2 to 3% of the required lithium if we use the current systems for electrification. We just can't do it. So how are we going to do it? We need different kinds of technology, like the new solid sodium cells that use widely available materials, such as sodium in the sea. This is a new technology built on existing technology and with existing take-up. Similarly, if you're still using solar panels or batteries that go into automobiles, but they're different and better, you're going to have a much faster take-up of those because you're changing one part of the system, not trying to change the entire system. Trying to change the entire system is very tricky. Yeah. I'm just thinking because I'm running out of time. You've got this question about the decision-making process, governance model, etc. We touched quite a bit on the just transition community voice piece, but I think it's worth looking at Calvert notes and the Access Foundation in the UK. So Kelvin in the US and the Access Foundation in the UK were both more than 100% aligned with the investor in the company, but they're towards it. It's worth looking at. And then on your digital technologies, these changes that are required are going to need quite a lot of blended and/or catalytic capital. So there is now a global alliance for blended capital, which is worth looking at that came out of the B20 of See, Indonesia. That was the Indonesians' 20 and catalytic. It's worth looking at the catalytic capital consortium to see three a project of Rockefeller, MacArthur, and Omidyar foundations. They have been putting in funds to test out catalytic approaches alongside research to examine where what kinds of catalytic capital are most useful in each kind of circumstance. That's a long-term but really valuable set of approaches. New value creation models for stakeholders, social outcome funds, sustainability loans, and bonds. The sustainability-linked bonds and loans are a mechanism by which if the impact goals are achieved, the rate of return is reduced. So there is an incentive for the companies that are receiving the bonds or loans to achieve impact goals. There are all kinds of things like this that are pushing a bit here and there.
The major concern is that we do not have time until 2050. We only have time until 2030, and currently, we are not making progress. This is alarming because we only have seven years until 2030. Urgency is crucial.
And we know we were running out of time, but we have one last question: If you had a magic wand to help or fix this, what would you use it for?
I think I would go back to technology because I wish I had a magic wand. If I had a magic wand to get people to accept the changes required due to climate change, my magic wand would be snapped out of my hands and broken into tiny pieces. So, I'm going to go for technology. I think back to the NASA moon shot, billions, probably trillions in current value terms, were put into that and it was successful. We now need quite a range of different new technologies and digital advancements. Can we use similar approaches of having these large-scale testbed funds as VC on a massive scale? In VC, if you invest in 10 companies, you expect to be lucky if you've got one unicorn, two or three. The rest have failed. We need that kind of VC energy but at a much bigger scale and with rapid deployment into mass use. It's notable that it took 20 years for solar panels to become cheap. So that's my magic wand.
Great! Thank you so much for your time today. We really appreciate your insights, experience, and everything you've shared with us.
This has been really interesting. Where do you plan to land? Where does your report fit in?
We are currently in the interview phase and are still speaking to people. Our goal is to publish our findings in mid-May. These findings will be open access, meaning they will be available to the public. If we use any quotes or attribution from you, we will reach out to confirm your concerns and obtain your approval before publishing.
With that said, what would you like to know? Please feel free to proceed with your questions.