Fran Seegull
Fran Seegull is the Executive Director of the U.S. Impact Investing Alliance, which advocates for an enabling public policy environment, catalyzes institutional capital for impact, and builds the impact investing movement globally. Seegull has a background in impact investing, having previously served as Chief Investment Officer at ImpactAssets and Managing Director at Funk Ventures. She holds a BS in Economics from Barnard College and an MBA from Harvard Business School, and serves on several investment committees and advisory boards.
Millennials and Gen Z's will demand transparency and accountability. Our job as Gen X is to make it possible for them. I feel like my generation is about transparency. The next few generations will demand accountability, and then we hope that it leads to a more equitable system environmentally, gender-wise, racially, and economically. That's the way we are going about some of this work in a more tangible way. We're starting to see some really interesting models in the United States of collaborative governance, collaborative decision-making, power-sharing, and power-shifting
— Fran Seegull
Interview transcript
Please introduce yourself a bit and tell me how you got into a career focused on making a positive impact. I was reading about you and it seems like you embarked on a journey.
Yeah, it's been a long time. I'm happy to share at a high level about your journey to impact investing. Also, I'm interested in the idea of collective impact, a multi-stakeholder approach, and distributing power across stakeholders. This is something we've seen more of in the United States, but it's still in its early stages. I started my career in philanthropy. I grew up in a liberal, secular Jewish home in Queens and Flushing, where my family was involved in labor unions and housing development. Many of my grandparents were tradespeople, including my mother's father, who was a roofer, and my father's father, who was an electrician. Working with our hands was a big part of our family culture, and I think that has influenced my career choices. I went to Columbia Barnard College for economics and then entered the contemporary art world. My mother is an artist, and my father was a businessman. I like to say that the first part of my career was about the business of art, and the second half is about the art of business. Both of my parents have influenced my career, and my experience in the contemporary art world has shaped the way I approach new ideas and entrepreneurs.
You connect the dots in different ways. Yeah, exactly.
So, I studied economics in school but ended up in the art world, which was a deviation from my original plan. I was a curator of contemporary art for a mixed-race couple and we collected the work of women artists, black artists, and gay artists in the early 90s, before identity politics as we know it had emerged. They were really thinking about how to empower diverse contemporary artists, and it was fascinating to travel around the world and put the collection together for them. This experience also helped me in my career.
Later, I went to business school at Harvard with a focus on trying to understand how to use the capital markets and for-profit business models to make an impact in the world. This was in the mid to late 90s, before the term ESG (environmental, social, and governance) was coined. The term "impact investing" was coined in 2005-2007. Of course, impact investing is not new, as you can go back to the Old Testament and see that they talked about ethical lending. You can go back several centuries and see that the Methodist, Lutherans, Quakers, and other religious investors were focused on investing. That's where the term "sin stocks" came from. Public markets for negative screens like firearms, tobacco, and alcohol were avoided by religious investors. In any case, the practices are new, but the terms have been around for probably another decade.
I did some interesting independent research mainly on two subjects. One was on women entrepreneurs' access to venture capital and how impeded it was and why women did not have access to venture capital. At the time in 1998, women got 2.5% of venture capital, and honestly, it hasn't really changed that much in 20-25 years. I tried to take a different kind of look at why women, and I think at least some of the dynamics extend to entrepreneurs of color, why they don't have access to venture capital. It's not just like, "Oh, you're discriminated against." It's a much more nuanced conversation to consider. The other was a paper that I did that posited that you could have venture capital-style financial returns and philanthropy-side impact returns with a certain kind of venture capital fund. It would have been another 10 years before those companies emerged. So it was a little out there, especially for Harvard Business School, but it really formed the blueprint for my career.
Since graduation, I have either been running consulting or investing in for-profit mission-driven businesses. Before this job, I was Chief Investment Officer at a big donor-advised fund. It's not in the UK, but they have it in Denmark or Italy. It's a kind of charitable investing and grant-making vehicle, and we invested for impact across asset classes globally. Then I took this role, which is a very unique role in field building around impact investing. So we do public policy to try to encourage more flow of capital. We convene institutional asset owners to try to engage in collective action, which is really hard as it turns out. We do a lot of movement building communications, and then I've also raised $1 collaborative, which is a separate but related project that grant makes around core impact investing infrastructure, public goods that allow all impact capital to flow, things like public policy, impact data metrics, and measurements. So we've built out a nice kind of these twin organizations, and what unites them is a couple of things. One is we try to move like a fulcrum around. If there's a seesaw, what we try to do is nudge the fulcrum left or right so that if we put a little bit of grab capital, public policy, collective action, we have the result punches above its weight. We try to nudge the fulcrum around to try to create the circumstances for greater change. On the theory of change side, and as it relates to what you shared about collective action, we have an emergent theory of change that a more equitable economic system will come from these top-down using the power of institutional asset owners to deploy capital to corporations and use them that power top-down tool of federal and state public policy. But the system that we create will not be fair and equitable if we don't also vitalize and revitalize marginalized communities from the bottom up, so black and brown communities, rural communities, tribal communities. When we think about public policy, when we think about the work that we do with institutional asset owners, we try to think about when is it time to use these top-down powerful tools? And when is it time to use these more distributed power, more equitable decision-making tools? That's where I think, in many ways, what you described is something that we think about. The transition from shareholder capitalism to stakeholder capitalism, we think about big companies and institutional asset owners, worker power, publicly traded companies, and the impact of the products on consumers, supply chains, and communities. But we also feel that we need to be supporting small businesses that are owned and operated by marginalized communities and position them to be suppliers to these larger companies. So it's bottom-up, top-down, bottom-up. It's a big part of what we do.
Fantastic! I find it really fascinating to read about your career and see the evolution of the different waves and trends. Based on your expertise in impact investing and multi-stakeholder approaches, what, in your opinion, are the top three topics or barriers to focus on to unlock a more multi-stakeholder approach and improve disability governance? If you had all the resources in the world, what would you prioritize? Please take your time to think about it, and it would be great to gain some clarity from your perspective.
In my prior life, I worked in many emerging markets. So, as I mentioned, my focus will be largely, but not exclusively, on the United States. If I could wave a magic wand, we would think a lot about an institutional drive to make it sound interesting. We focus a lot on the future of fiduciary duty. Fiduciary duty in the future, the future of fiduciary duty, a fiduciary duty for science foundation trustees, university endowment trustees, and pension fund trustees to invest under the presumption of visibility to maximize financial short-term management. It's about the primacy of shareholder value and financial returns, but we think that the focus on short-termism and short-term returns ends up leaving a lot of value on the table. So, we want to move from short-termism to long-termism, to check the investment horizon and move beyond.
Currently, in the United States and elsewhere, a fiduciary can only take environmental, social, and governance (ESG) factors into account in investment decision-making if they are deemed financially material to a company. For example, if you're Nestle, dwindling natural resources and freshwater access are financially material. You can take ESG factors and impact factors into account only if you think they will be financially material to the company. This still puts the shareholder as the highest and most important thing to accomplish, which is more returns for investors or shareholders. We would like to move from this focus on single materiality, financial materiality, around income factors to double materiality. The European Union is the farthest ahead on this. They focus on double materiality, which means that ESG factors such as street factors like the ones I gave you, water inventory natural resources, globally, biodiversity will have an impact on a company, but stakeholder materiality is about the impact that is rendered on the world and on the environment on stakeholders by the company. Currently, those externalities are not priced, and they are invisible.
What we do in the tipping points on us impact investing lands, these trade organizations, and I run is we try to think about what we can do in the United States and globally to move from the fiduciary duty that binds you can get sued if you don't maximize short-term if you don't maximum financial insurance. How can we move from short-termism to long-termism? How can we move from single materiality to double materiality? That's the thing I would like to change with a wave of my magic wand.
What is required for that is regulations. Legislation will never be litigation. There's just a lot that would happen, and then there would be some backlash. What would be required to make this future fiduciary duty possible is important transparency, and we work very hard in our field, particularly in this field builders, to manifest transparency. You may know that whether it's the SEC in the United States, the EU, or the IFRS Foundation, which is in Frankfurt, and that sets accounting standards for over 145 jurisdictions, we are trying to get a harmonized sense of what constitutes impact factors and have standardized disclosure around it. I told you it's going to be boring.
Just like it sounds dry, but it's meant to impact transparency. We have clear comparable data across corporations. For example, the European Union requires environment scope 123 emissions, which means scope three US emissions in the supply chain. This applies to anyone who is a supplier to a company that is domiciled in the EU or regions who do substantial business in the EU. Therefore, this supply chain information will be required to be disclosed by publicly traded multinational companies and small companies in the global south in order to fulfill the EU regulation. One of the things we're trying to look at is what is scope 123 and human capital and UN Human Rights. We think human rights on the supply chain, which is very complicated in certain communities, is something that we hope to manifest in a world with impact transparency. We believe that if we can manifest impact transparency, then we can move to impact accountability. And if we can move to impact accountability, we'll have a system that will hopefully manifest more equity. So we go from the very dry to the three things that we're focusing on to try to get more of a multi-stakeholder approach. It's really going to get to an economy of impact transparency. Millennials and Gen Z's will demand transparency and accountability. Our job as Gen X is to make it possible for them. I feel like my generation is about transparency. The next few generations will demand accountability, and then we hope that it leads to a more equitable system environmentally, gender-wise, racially, and economically. That's the way we are going about some of this work in a more tangible way. We're starting to see some really interesting models in the United States of collaborative governance, collaborative decision-making, power-sharing, and power-shifting. Sometimes I feel like we're in impact investing, tinkering around the edges of a broken system. We still operate within the capital markets squarely in the rules of the existing game. We're also very interested in figuring out how we can disrupt the actual current system and manifest models that don't work within the existing system and our concepts of what constitutes our money and decision rights. There are a couple of projects. One is called Eugene McCroskey, and another is called the Ujima project. They are in Boston, but I think they're spreading around a little bit. There's another called the Boston Impact Investing Initiative. There are nonprofit organizations called Transform Finance and Common Future, and all of these organizations are trying to manifest models that disrupt the current system of power and consolidated wealth and consolidated decision-making. I'm happy to share a little bit more about them. It's almost like we can innovate only so much within the context of the current mental level of markets power, the primacy of shareholders, and then there it's also important to be thinking about how we actually change the system. Will it come from outside innovation or will it come from inside-out innovation? I feel like I went to business photographer recently, and I wanted to disrupt commerce center. That's my personal goal. Yes, I want to just run from the center, but I don't have the temperament to march in the streets and to be an antagonist from the outside, but we need both. That's why I say I can disrupt the system by maybe creating impact transparency for the next generation to be thinking about things in a very different way. I'm Gen X, so in some ways, I'm a variation on the last generation, a variation on a theme of boomers, and I follow my teammates who are Gen Z, Y, and Z. I think that they're the ones who are going to try it. This girl is going to carry on. Anyway, that's a long answer to what some of us would change to try to manifest the real ultimate change that we want, not just trying to tinker within the existing power structures.
This is an interesting topic. Iskra, do you have any questions or should I continue? She mentioned the word "data," and I'm sure you have worked with data extensively in the philanthropy and UN worlds. Therefore, we are sensitive to the topic. You mentioned connected health status and how it relates to different stakeholders and players. Do you have any questions?
I have many questions, but my main question about impact transparency is regarding the law that has been passed. Now, regardless of the size of your company, if you surpass a certain amount of income, you have to disclose your entire supply chain. This brings up the question of how to make it work on a global scale. You mentioned this is the first step, so I'm curious about what your ideal scenario would be and how everything would function towards that goal.
To deliver on the promise of impact transparency, we need to understand the impact that occurs. I used to teach a class on impact investing at USC when I lived there. In the first class, I read a September 1970 article from The New York Times Magazine by Milton Friedman, the famous economist, Nobel Prize-winning economist, and in some ways, the father of neoliberalism and the primacy of shareholder value. The article was titled "The Social Responsibility of Business is to Maximize Profit," which essentially means that businesses and society follow the same rules of the game, and no one should be left behind. I gave that to them as a PDF, which was terrible.
Students often don't receive any reading or preparation before the first class. Some instructors may assume that only serious students will be prepared. During one class, we used a cost-efficient exercise to illustrate the relationship between corporations and the capital markets, universities, nonprofit organizations, governments, and other institutional entities. We drew meatballs to represent corporations and balls to represent the other entities. Using different colored pens, we demonstrated the flow of money between the balls and the impact of those flows on the meatballs. This exercise showed that the impact of money is everywhere, but often opaque to stakeholders, investors, and communities.
Even corporate sustainability reports and ESG rating agencies may rely on cherry-picked metrics and publicly available PDF information, which can be unreliable. To create a true impact economy, we need to reveal the impacts everywhere, including in government spending. One way to achieve this is through global regulatory regimes, such as the EU and the IFRS foundation. At the Tipping Point Fund, we are working on data harmonization, standards adoption, impact verification, and data infrastructure to ensure that data is interoperable and can be used by anyone. This includes tagging data with XBRL so that it can be used anywhere. Our goal is to fund the SPL Foundation and data consortia to ensure that data is not only available but also reliable. By doing so, we can make sure that the impact of money is transparent and that fiduciary duty is upheld.
It's interesting. I'm coming from Copenhagen when it was snowing.
Yeah, it's like early spring here, but for some reason, I've been cooped up in one bedroom, New York apartment since you know,
Where are you? Where are you in New York?
I'm going to Lincoln centre. We know Amsterdam the 62nd. So right is a great part of the city, but it's not a lot of fresh air and not a lot of niche access to nature, unfortunately.
Okay, let me clarify. We just had a question, but before that, you mentioned some interesting cases. One of the questions we'd like to ask is, who are the stakeholders and purpose/impact holders you'd like to partner with? Is there an ideal partner you haven't been able to work with yet, for legal or other reasons? This partnership could potentially unlock doors for impact investing. Are there any providers or rollovers you don't have access to today, that could help in this regard?
Also, I didn't catch your accent earlier. Can you remind me?
not even aware. So to release money, investment capital. Yes. And also
in general, like contributing to facilitating impact. You know, maybe it's not just money, it could be time it could be any other type of resource or knowledge or,
You know, impact investing is typically the domain of big institutional investors and wealthy families. In my prior role, we did a lot of work to democratize access to impact investing, making it more available to individual investors. However, there are many internal barriers to capital deployment, ranging from regulations to people being too busy to consider how their retirement funds are invested. To me, democratizing access to impact investing has a lot of intellectual appeal, but the practice of it has been highly impeded and very difficult to get money to flow. Ultimately, we are trying to communicate to pensioners that whether it's a 401k, which is like your own retirement account, or a pooled pension fund, where the capital is more centralized, that this is the people's money and stakeholders should be able to communicate their preferences to the people who manage their money. We see this happening more in Europe, where there are centralized pots of capital. In the United States, we are seeing a lot of pushback from the right on ESG investing and impact investing. At least three candidates running for the Republican presidential nomination are running on a platform of anti-"woke-ism" and "woke capitalism." This campaign is not just focused on impact investing, but also on education, access to information, and social issues like LGBTQ+ rights. They argue that politics should be kept out of pension funds. This campaign is well-funded by the fossil fuel industry and other old-school industries that want to punish Wall Street entities and others from taking the environment and workers into account. This is not an international phenomenon, but it is interesting to see that there is a real backlash against impact investing. There are many powers in place that want to maintain the status quo.
And no, I mean I was asking questions about money to choose one or two for the time being. You see, many people's lives have been impacted by finance, investment, and other things, but they have been using their wealth for the intention of creating a positive impact for the future. This may sound like a stupid question, but it is necessary to ask: in your view, based on your experience, what prevents people who are not wealthy with funds or not currently doing any impact investment from actually doing so? Especially when you consider that it can affect not only their lives but also the lives of future generations. What is the psychology behind it? Do you think it is related to human decision-making processes?
Yeah, so I think part of it is that as humans, money is a very loaded topic. We never seem to have enough of it, whether we're living below the poverty line or we're billionaires. There's this feeling that we could never have enough money and power. Yet, while some people enjoy managing their money, most of us don't, myself included. When I go home, my father will chase me around to talk about financial management, and I just want to run away. It's a system that many of us don't understand or don't believe in, and so it's very confronting to people of all kinds. Moving your assets from Wells Fargo to a community bank or reaching out to your corporate pension plan sponsor to ask why there aren't any ESG funds on the platform can be daunting. People are just trying to get through the day, mothers and fathers are trying to get their kids out the door with lunch, and single people and all people are trying to make sure their elderly parents are okay. Personal financial management is confusing and operates within a corrupt and twisted system. We have so much incoming that we don't have time to focus on it. That's why the average person, and maybe even less than the rich person, doesn't have time to move money to a community bank because it's too confronting and there are switching costs. There are perceptual and actual switching costs to changing your asset allocation. These are some of the human behavioral reasons why it's been really hard. For the individual investor, aside from ESG funds, there aren't many Deep Impact options available and appropriate to sell to individual investors. That gets to more institutional barriers.
Sure. When considering your team's mission and the fact that your team members are very young or from your generation, it's worth considering what expertise is currently missing from your team. In other words, what new profiles are needed to merge with the field of impact investment to become even more contemporary in terms of betting on impact? This is, of course, a question about education as well. What kind of education should be created to enable this in the future?
Well, a couple of things. One of them is the biggest management challenge for folks in my generation (older millennials and Gen X) is how to attract and retain Gen Y and Gen Z. I think that there are a lot of folks in my generation who don't understand and don't take the time to understand millennials and Gen Z's. I believe that neuroplasticity is the path forward for me and others of my age, and I have consciously released my beliefs on how to do things and how to get things done. My belief that younger generations don't work hard enough or don't do things the right way is no longer valid. By learning about future ways of thinking and empowering my younger employees, I believe I can create the culture I'm trying to manifest and achieve success for my organization. This is why I've been able to retain employees for up to six years.
In terms of expertise, we do a lot of technical data-driven funding under the Tipping Point Fund, but we're armchair technologists at best. We've had to hire a consultant who's an expert on data because we're smart enough to get it right, but not totally. I think data is one area where we're lacking.
The other area is strategic planning. We just came out of a strategic planning process, and I feel like the traditional approach, like Michael Porter's focus on corporate strategy, is totally empty now. My board wanted a five-year plan, but I told them it's a waste of time and money because we're going to get it wrong 110% of the time. Instead, we're going to do a two-year plan because we also operate in the midterm elections, and we want to be responsive to changes. I believe that long-term planning is dead, and my younger employees and I have developed a flexible vision.
One of the key themes I've noticed in interviews and conversations with super interesting ventures from Southeast Asia to Africa is prototyping, testing, and iterating. We have a mantra that embodies this approach, which is fantastic. As you mentioned, I couldn't agree more.
One thing to consider when talking to smaller organizations throughout the global South is the growth model for small enterprises. This is a challenge for entrepreneurship, social entrepreneurship, and tech entrepreneurship. Some small enterprises have very specific play space models, some of which can be replicated in other countries and some of which cannot. We can see examples where replication versus scaling is successful. When we see the magnitude of the problems, the first thing to consider is investing in small ventures in underserved, underdeveloped communities. However, impact can also be found in the capital markets and everywhere else. We need to reveal the impact of a catalog of big corporations and the government, even small, scaled, and replicated innovations. I believe that's how we can achieve scale, even though I am captivated by small entrepreneurs in Nigeria or Kenya.
Have you witnessed any mind-blowing applications of technology? What is your intuition regarding the use of technology going forward? This includes blockchain, distributed internet, or any other emerging technologies. Do you have any hope or intuition regarding the role of technology in the future, given your earlier emphasis on transparency?
You know, it's just not my way. I think we all have areas of deep expertise and areas of deep weakness. I would say that technological innovation is one of my weaknesses, so I'm not the right person to ask. There is a woman I know who is working for an ultra high net worth family. She won't tell me who it is, but we can probably guess it's a tech entrepreneur. She's trying to look at publicly available sources of data, government data, and international government data to understand what kind of interventions might be most helpful. I think that's really interesting. Steve Ballmer developed a website a while ago that collects all US government data and tries to make it more accessible. First, we need to ensure the quality of the data, and of course, having leading hyper data is a whole other thing. On the public market side, we're trying to get clear, comparable, and useful data to make investment decisions based on that data. It's like the world of investment quants, of which I am not one. But I'll give it some further thought.
Perfect! It has been a pleasure meeting you. Even though we may never have met before, you seem like an empathetic person. I felt a closeness to you, even though we have had completely different paths. It sounds like we have a lot of similarities in terms of design and innovation, and we are both exploring different deals. I have a lot of empathy for your journey. If you have any closing remarks or anything else to add, please feel free to share them.
I'm happy to continue our conversation at some point. Unfortunately, I have my next appointment. However, it's been my pleasure to have coffee with you and talk at this level, which I don't normally do. Thank you for the opportunity.
Thank you, and we will definitely be in touch. Our next step is to collect all this data and come up with key insights. We may contact you for an open conversation online, along with a few others, including your federal financial advisor and Musa. We want to discuss the future of impact investments with you. Thank you for your time.
Yeah, I would love to see your insights.
Perfect. Thank you so much.