This Week in Startups - Proof of Impact CEO Fleur Heyns on meaningful metrics for measuring environmental impact (This Week in Climate Startups) | E1466

Episode Date: May 22, 2022

In this episode of This Week in Climate Startups, Molly sits down with Fleur Heyns of Proof of Impact about how to measure, verify, and analyze ESG & impact data. We discuss the current pain points for investors (11:20), how blockchains can interact with real-world assets (21:15), ESG regulation (34:16) and more! (00:00) Cold open (01:57) This Week in Climate Startups: Molly sits down with Fleur Heyns of Proof of Impact (10:03) OpenPhone - Get an extra 20% off any plan for your first 6 months at https://openphone.com/twist (11:20) Labeling data for investors, the materiality, productivity (19:58) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist (21:15) The term “oracle” as it relates to the blockchain (32:58) Reforge - Apply for their next cohort at https://reforge.com/twist (34:16) How much will the future regulatory atmosphere affect or improve their business in the US? ESG strategy Check out Proof of Impact: https://proofofimpact.com/ FOLLOW Fleur: https://www.linkedin.com/in/fleur-heyns-9a8a9436 FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

That's our North Star, so anyone that we hire, if they even show a little, little glimmer of thinking that they're working for some form of an NGO where, you know, this is something nice to have on the side, they can't work for us. Like our entire North Star is to direct capital to companies that matter. They matter because they do the right thing and they do it very, very well, right? So this is the infrastructure that we want to build. So if we're successful, our kids will not even need to use the word impact because it will be embedded in any transaction they engage with. When they buy a product from a supermarket, when they go to their digital accounts and they engage and they stake and they do whatever they do, the data will be visible. The proof will be there of the financial, the environmental and the social performance of that particular asset.

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so apply for membership today at Reforge dot com slash twist. Fleur Haynes, thanks so much for coming on this week in climate startups. Nice to see you, Molly. Nice to see you. So I want to,

I think, before I ask about proof of impact, I want to ask about your background in investment banking and an impact investing and the company that you previously built in Africa because in addition to the current company being really interesting,

you are a very interesting person. Well, thank you. That's nice to say. Yeah, so I'm originally Dutch, but I was educated in the UK and got headhunted, recruited by these swish Goldman Sachs ladies who showed up at one of my colleges and went to investment banking, as you said, got utterly bored after two years in London working from like, you know, 7 a.m. to 6 a.m. So asked if I could move to an emerging market because it was 98, 99, Argentina was exciting,

South Africa was exciting. And the bank said, listen, you're Dutch, you need to go to South Africa, We're building up an office there. That's where you need to start. So I started and lasted for three months at the office. It was actually a J.P. Morgan at that time. And was attracted to a business proposition from another ex-JP. Morgan bond trader who said, listen, the internet has just arrived. We need to give emerging market retail investors access to these global markets because they want to invest.

They want to trade. They want to buy the highs and lows. But when the telephone was there, it was too expensive and too cumbersome. But if we can use the internet, we can really create an amazing platform. So we build what is now known as Easy Equities, Easy Crypto, has one and a half million users. At the time, we called a global trader, global trader 24-7, because it was a dot-com, obviously. And, no, we had a very successful run. We built the technology in South Africa, which sounds a bit ironic because really technology in South Africa.

But the development skills were outstanding. It was a quarter of the price, and we then expanded globally already. So within seven years, we had a billion dollars on our overnight book, and the market started getting choppy because, you know, the realities of a lot of credit and a lot of volatility were coming in. So we sold to a private equity firm literally at the peak of the market in 2007. And I was living in Russia at the time. My husband was building an investment bank there.

And with that sell, it allowed me to go back to university. so I went back to Oxford, and then started working with the school faculty. So Jeff Scholl, the co-founder of eBay, he really started pioneering this concept of social enterprise that then evolved to impact investing. ESG was a dirty word then, but we launched what is now the largest sort of environmental fund. So yeah, there's a lot of things that happened since 2007 that are in this new direction. Right. So that sort of started you on this journey to impact investing, it sounds like.

And what did you realize was wrong with it that led you to proof of impact? Yeah, there were several things wrong, right? So the ability to scale, right? If we're talking about impact investing as creating not just business solutions that solve for the world's problems, but, you know, creating solutions that solve for the world's problems in a financially very profitable way, you know, where you even could say if you're not solving for the world's problems or if you're not contributing to all of the stakeholders, then you should be penalized.

And if you are, you should perform better, right? Because that's where we as consumer, that's where we as investor want to go. So the first problem was really, how do I know if I invest in a company or in an infrastructure asset, what the real environmental impact is? And that is still one of the most difficult problems to solve for. In addition to carbon accounting, solving for what is the real impact of a private company or a private asset on the ground is tricky because they don't have to do data disclosures.

So then that gets us exactly to proof of impact, which is, well, go ahead and tell us. So tell us about the company you have founded now and how you're trying to solve that problem. That was problem. That was problem one, which was the data disclosure. Yeah. The second thing then is if you have the data, what do you do with it? Like having lots of data that doesn't have meaning, right, that doesn't correlate to either a real outcome, impact or financial is meaningless data.

So you need access to real raw material, role material. data. And that's all for, you know, one of the levels of the proof of impact platform where we collect the data through APIs directly from these companies. The second item is then, what does this data mean? What is it saying? Does it matter even? You know, because we're so focused on one metric, which is carbon, do we really, really know that if we solve for the carbon problem, which is completely reversible versus other problems that are not, that the world's going to be better off? We don't know yet, right? So being able to conduct the analysis, you know, whether it's even just by following these assets longer or by doing scenario building,

that's really the analytical component that's necessary. And then the third layer is, okay, if I know that this data is meaningful, it's material. If I reduce the usage of my resources, water, if I produce less waste, if I really make sure that I, you know, reduce the emissions of carbon, what are the consequences of that to my operating margins? Does that maybe improve my valuations? And if so, can I then link this data to this new, world of digital and hopefully more and more decentralized finance.

So I don't even need to use an investment bank anymore because that was the second problem. I need the data, but I also want to have scalable liquid investment products as an investor that have impact. So those two things are effectively what we're sitting at this interface of. So let's unpack the kind of multiple parts of that. So first, you have built an API that collects data. Where does it collect data from? So the data management platform that has APIs to it, right?

So those are just pipelines, right? They're data pipelines. And at the moment, we have like 220 different data pipelines. So we can connect it into your CRM system. If you have a claim that you're servicing single moms, right, with a mortgage product or that you're servicing, you know, people who otherwise don't have access to energy, well, then we can prove that because we can look at the demographics of your user and your CRM. We can connect it into the utility, sorry, connecting to the ERP system to see what are the

utility bills, you know, do you actually, you know, use your energy off the grid? And in which case, which grid is it? Who's the provider of that energy? And in the U.S., your utility bill's pretty broken down. In the rest of the world, you know that if you're using a utility, you probably don't have green energy, right? Because take, for instance, in South Africa, we have S-com, it's coal, you know, or, you know, in a better case, nuclear, but it's not renewable energy. So those are the types of information that we get from the company themselves. But they're kind of a bit boring, right? Because you're like, well, that company already has that data. So we augment this information, and this is where it gets really exciting with what we call

objective data, right? So is there maybe a chip card in the solar device, right, that sits on your roof, if you're a Walmart or whatever, that shows how many kilowattage, for how many hours, has that thing been working to produce the level of energy that you claim you need to run your shop? And when we get to this third-party, more objective source of information, we then don't talk about just, you know, self-submitted data. We then start talking about verified data because there's different sources of information that can corroborate a certain claim. And these claims can be environmental. But what I think is going to be increasingly important, in addition to not just looking at carbon, is that we need to look at some of the social metrics,

right? So to what extent does your product or service really have an impact on the consumer, on your employees? And that kind of data doesn't come necessarily from a technology device, per se, but it comes from digital surveys that go into mobile phones, right? And even in emerging markets, there are billions of people who have mobile phones. And they can answer a survey and they can take a photo. They can even take a video of a child sitting on a manufacturing floor as a risk event. So this is very exciting in terms of the new level of data that now is accessible and affordable. Listen, lots of founders are Lucy Goosey with their personal phone numbers.

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that puts it down to $8 a month. You're kidding me. You need to do it for yourself as an executive or a salesperson. Openphone.com slash twist. And if you have an existing phone number with another service that's overcharging you or that doesn't have this incredible feature set, they'll put it for you. If you're thinking about phone numbers, I just want you to think openphone.com slash twist. That easy, folks. So that's sort of the step one of getting the data. And then what happens? Then what do you do with the data and make it actionable? Yeah. So as you may have noticed, there's a lot of frameworks and color-coded boxes, right, that we're using in the world to describe, you know, what are people doing? Green typically means something environmental and then the red and the

orange or more social. So there's probably about seven or eight different frameworks where people want to still label this data to. And even though the label itself doesn't necessarily make it meaningful, it does allow for action to take place. Because if you get this information, the data that we just collected from the ground up, and you label it in a way that investors understand that language, right, or regulators see your compliant, then it has utility for that particular investor client or that particular company. So that utility function is the labeling directly of all these raw data points to these complex frameworks.

And there's thousands of metrics from SASB to Sustainable Development Goals to the global impact investment network, IRIS. So these are things that we are specialist in now. And it's complex. It's quite hard. But that's still labeling. What is more meaningful is what you're just asking for is what is the materiality. So as I mentioned in a previous example, if I can show as a manufacturing company that I

manage my resources better, does that improve my operating margins? Do I literally make more profits, right? And if so, there isn't a manager in the world or a CFO in the world who isn't going to make investments into equipment that is more resource efficient, right? So that's one thing. The other thing could be productivity. Like we talk about diversity, quality, and inclusion on the workforce. Does that really have value? I mean, in some markets, you know, having hygienic, you know, you know, washing facilities for staff is a massive morale booster. Like it makes them feel proud of where they work. And, you know, it might even be the free meal on the Friday, right, that really sort of

gets people. So all of these inputs that then have an output, which is greater job satisfaction, more productivity, which again could lead to greater outcomes, which are revenues, these are the performance metrics that the future proof companies have to have within their arsenal. And these are the future-proof metrics that the investor wants to identify when they want to create a portfolio that's going to be neutral in 2030 or that's going to outperform the rest of the market because the productivity is higher. And that's the that's the materiality of it. So there's a double goal with this data. One is to show this impact and then have these companies make investments that will ultimately make their businesses better and of course more profitable.

but that is the impact. And also the sort of two-sided part of this coin is that they can then attract investors. They can say, I am better than the other guy because I can prove the materiality of my impact. And it goes one step up in the capital stack as well. So for the investor to select the portfolio companies even proactively, so before they make the investment to say, I'm looking at 20 companies in the renewable energy space, for my dollar invested, which one gives me the greatest carbon emission reduction, right? So this is already at what we call this, it's ex ante, you know.

So before the execution of investing, our belief is that investors will have to start in their due diligence process, look at this information because otherwise that investor, that GP, won't get any money from the LP who typically is an asset owner who sensitized to this kind of an outcome already. Right. So because there is pressure and in some cases regulatory pressure to have, like you said, a carbon neutral portfolio or a portfolio that adheres to sustainable development goals. This proof of impact, it's such a like the name is right on the nose. This proof is what can drive investment in that direction.

Like with safety. It is safe to make this investment because it's not greenwashing, for example. It's a little bit like when we move to the e-commerce businesses, you wanted the Veracine, right? If you're going to put your credit card down, you wanted to make sure that there was some assurance, right, that that e-commerce site was financially sound, right? And we've always done it in the financial market context because that's all the data we ever had. But now that we've unlocked this, you know, vast amount of impact and ESG data, our belief again, and we're seeing it already happen, is that indeed,

either by force or by choice because it's going to be the data that indicates performance, the investor and the company will want to have a proof, right, the proof of impact, established to make sure that they are future proof from an investment or from a company performance perspective. Right. I heard an interview with you on another podcast where this was described as a new system of credit, essentially, a way to establish credit worthiness for companies in these areas. Well, that's the third level, right?

So we've got the data, right? The role material. We've got the insights, the performance. This is going to be better. The third one is, what if this is directly monetizable, right? So it's not just a nice to have on your financial report and your website. It actually allows you to go to your bank if you're a company and you've got a loan. Or if you're a real estate developer and you want to get a mortgage and you're like,

I am of lower risk than anybody else in the market. is I'm going to show you how resource efficient I am, how social responsible I am. Why should I have to borrow at the same price as someone who doesn't show you anything? Because we know the highest risk is when you don't show anything. So we have clients now who have lending platforms. So they lend out their money to borrowers who are small to medium enterprises. These could be women-owned enterprises. You can be black-owned enterprise.

It doesn't matter. But these are enterprise that typically are disserviced by particularly the American credit scoring system. It's called the FICA or the FICA. I don't know how you pronounce it. And it's been biased FICA because it's been working on data. It was called the weapons of math's destruction. When they did the analytics, they didn't really take into consideration the diversity

of the demographic. And they came up with rules that, you know, a male borrower is better than a female borrower. And they embedded that in their models. So we're saying this is the new way of forget about the static, delayed, irrelevant models. This is a new way to look at fresh data, first principles from the ground up, and being able as either the lender to give, I want to say discounts, but it's called a better funding terms because you know that you have a better borrower anyway to those borrowers.

And then we create a pause of cycle because if you do the right things environmentally and socially, you get greater cost of capital on the debt side. We think this will also go to equity markets, but it's a little bit delayed because equity markets just typically are, right, in terms of structuring new forms of strategy into their, new data into their strategies. But once it becomes clear that this is how you create value, how you grow faster, then it's no longer, oh, do I really need to add this on? It's like, of course I do it because that's how I'm going to make more money, you know,

either as the financier or the company. It becomes part of the standard diligence stack. Not that's a diligent, but that is the way of which a asset gets priced. And then the fourth level is when an asset gets priced at right now, if you go and borrow money, you get a loan agreement. And that loan agreement has certain terms in it. And it's all analog, right? It's a physical document in the PDF.

And you as a bar have to adhere to those terms. And then you get the price. The interest rate is then set. The fourth level is that this is all digital. So you don't have a loan agreement anymore. You show up as a company, right, a small medium enterprise, doing amazing things for amazing people. You show up with that data at the bank, right? And the bank goes, or the Dow, right, for the matter goes, unbelievable, great, love this data bundle.

We're going to give you money at 0.5% and not 8.5%. So this is where it will evolve to. And that bundle of data becomes the smart contract, the smart token that then the investor holds and where to which he will then be, you know, recompensated, repaid and he, you know, will then obviously receive the interest from the company that way. And that is that evolution of what we call the impact. work goals to go into decentralized finance. Let's dig into that.

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Well, so let's do a little more definition. Sure. And then we'll come back to which parts you have built in are selling. Oracle, in this case, is a very specific term related to the blockchain, right? You're talking about a fixed set of information that cannot be changed and can be relied upon as the Oracle. I just want to, for people who may not be familiar, make it very clear we're not talking about mythology. No. No, we're not talking about that kind of an Oracle, although this impact Oracle could lead to that kind of an Oracle because you could then predict.

So you're 100% right. There's two types of oracles, really. One is an analytical one and one is more the transactional one, right? So the analytical one says, we have established proof of impact. It's the same thing as the data management platform. It's just in a different format because it exists on the technology that as you rightly point out, that once the data goes onto the blockchain, it is immutable. Whereas if I put data into a database and someone audits me in three years time and says,

you made a claim that you were 100% green, right? I'm looking at your utility bills and I see that you have taken energy from American gas or whatever it is. So in the data management portal, there's not much we can do about that, right? We cannot say, oh, but here's the database. You know, those are the utility bills.

They'll be like, yeah, you just put those in. You know, that's not what this is about. I mean, and you could still be liable for having, you know, pretended to do something that you're not doing. When you have the impact oracle, so when we've established the proof of impact because of the data collection again. That doesn't change.

But once that real clean, verified information is the evidence of a particular impact claim. I have gone 100% green. There isn't a single bit of fossil fuel energy going into my business. And you then write that onto the blockchain and that remains. And that's an analytical Oracle where no one can ever dispute in the future that you have satisfied that claim. It's a little bit like proof of work, proof of stake, proof of it. proof of impact again, surprisingly, right? So that is the proof of impact that is established at that point in time.

The transactional Oracle is more that if you have established the proof of impact, so there is analysis that shows that you have a legitimate claim, then you can say, let's issue an NFT, right? Because I have an impact claim. I have a carbon credit. So that's the transactional Oracle that will then be able to convert the analytics into something that could be an investment product or an NFT or something like that. So those are the two versions of it.

I mean, it's a long-term vision that has such power in terms of directing the way that money gets allocated, right? Like how, at what point do banks come out of the equation in this vision? Good question. I mean, I think this is something that we always struggle a little bit with. Like, do the incumbents still participate or do they become entirely obsolete? Right. And if you look at the history of finance, right? I mean, banks tend to not become obsolete that quickly.

Like we've digitized finance, we've even come with digital banks, we've come with other solutions. It's just a different form of a similar type of regulated, centralized organization, right? That is still what the banks are. Do we think that they are going to be eradicated because of something like this immediately? Probably not because there's so many users who wouldn't yet be able to interface with an alternative. And say that the alternative is a Dow, right, where you have a network of nodes, right, that effectively become an investment platform through which investors can screen, you know,

through a staking pool, what opportunities may be interesting to them. And companies would just upload their data, right, onto the Dow through the proof of impact, impact oracle, right, for their impact information, through a credit or finance Oracle, for their financial information. So if that mechanism, which we're already launching, by the way, so the extent of a Dow actually going and offering the proof of impact verified companies, NFTs, that will go live in Q3 of this year, right, in Switzerland to begin. And that's obviously not proof of impact because it's a Dow, right?

But that will effectively be the launch of connecting that. If that takes pace, right, and it becomes a new way of, I mean, my kids are between 11 and 23, right, for them to take their revoluted money that isn't doing anything in terms of yield or earning, if that becomes the way that they then stake, right, whatever they have there, to then stake with both a yield because we're talking about value, right? We're not just talking about buying a board aid, right? We're talking about something that has legitimate underlying cash flow assets. If that then becomes the way where they then restake their digital assets to have both profit and purpose, I think the investment banking model is going to struggle to stay a lot.

Yeah. Fascinating. Back to your business, you said the Impact Oracle is effectively launching. Where are you now? Who are your clients? And what do people pay you for? Yeah. So currently what we're live with is with our SaaS business, so software as a subscription business for two customer groups, the investor who right now, so the investor predominantly for us is a GP, right? So someone who has a fund, either in private equity or private credit, who's feeling pressure both ways, one from the LP, who's like, my asset owner is asking what my money is solving for and I don't have a clue, right? So can you please give me some data? So that's where it

starts. And also regulators. So regulators, particularly in Europe, have already legalized the requirement for data from investors. The SEC is getting ready to follow that kind of, you know, trend as well. So then it becomes a standard that investors have to disclose not their policy, which they've been doing for years, and that was always meaningless, but they actually have to disclose the data. So that's our target market, because with that, we then have a bit of force onto the companies and say, you now need to onboard. Having said that, our users are the companies, right? Because the companies have the data. Our data integrations go into the companies. So we're simultaneously creating this flywheel of as many companies.

companies as we can on board, because that again makes it more attractive to the investor to get the right insights, which companies are performing better, et cetera, et cetera. So it's those two that we're now currently servicing and they pay us a monthly fee between $500 to $5,000 on average. And we have 100 clients like that since our launch last year. The Impact Oracle, which we call more of our Web 3, we have three pilots in the making. So we have one with a very large Swiss institution who wants us. to verify these impact claims and then digitally create a funding mechanism for them.

We have a very, very large investment bank, actually, ironically, right? Who has... We won't play this for them. They don't have to listen to that part. But it's nice to know. It's a little bit like the gas in all companies who invest heaven and solar, right? Exactly. Get ahead of the disruption.

Transition. Yeah, transition. So let's call it a transitionary investment manager, right? who effectively has a lot of capital deployed towards building, wind farms, solar, etc. They want to establish that proof of impact Oracle at sites, at the source, right, through the digital solution, create digital carbon credits and then launch those on a digital carbon exchange. So that's now in a pilot form. And the final version is what we call impact-linked finance solution, where we have a borrower.

So we have someone who, as I said earlier, lends money to small-medium enterprises. And they have their wholesale lender, so the bigger, bigger institutional funder who says, if you can show that more than 44% of your portfolio is women owned, and if more than 80% of your portfolio are tiny little businesses, because that's where economic growth normally comes from, then we will cut what they call the credit spread. So rather than borrowing at 4%, they can borrow 2%. So that's the third application.

How hard is it to do this? I mean, it sort of feels like there's a regulatory boom. but I wonder from a technology perspective, a lot of companies are rushing into this space, right? Some version of data analytics or measurement. What is the differentiator for you? So that's a bit of a problem, right? So there's a lot of noise in our ESG and impact data industry.

And there's a couple of areas where, you know, certain data providers or data analytics company are different from others. So first you have to look at what is the underlying investment? Is it a public equity, right? So a company that's listed on the public exchange because in those cases, the data sources are very different. They actually issue reports, right, every quarter. They have to do their quarterly filing, their quarterly reporting. Those get picked up by Royders in Bloomberg. And then you have hundreds of ESG analytics company who go, oh, here's nice processed meat, right, that I can stuff into my sausage. And then it becomes like, you know, this ESG scoring rating. But unfortunately, the meaning of those ESG ratings is highly debatable because the raw material, the underlying source of the meat isn't known. It wasn't sort of, you know, well indicated. So that's a problem there. But we don't play in that space. So we don't play in the public equity space. Someone has to solve for that. Yeah. No, no pre-made sausages. No pre-made sausage. Love it. Yeah. So then on the other side, which is this private markets, which is what I said,

that was the problem that we intended to solve for. Like in an environment where companies are do not have to disclose, how do we get the data? The difference between us and everybody else is, and that is the hard work, is that we are literally connecting into the operating systems, IoT devices, digital surveys. So we are, and I don't like using this word, but we are in that sense the plumber, right? We are literally creating those pipelines. And that very few people have done, right? Because it's hard work, right?

And why would you do it? Well, we do it because we also have the impact measurement expertise, which is another big, big skill set, right? So having data come in, but knowing what that data could mean are two very different things. So over the last, I mean, for me, this started in 2007, right? Some of our team members were like the first guys who built like the impact bonds for Freddie Mac, right? So maybe that was seven, eight years ago. So we have this inner blood.

We have this inner team. And we have a very dedicated impact data strategy team that is experts in that. And if you ask any of the carbon tech solutions who come to us to partner, they're like, listen, carbon accounting is hard. What what you guys do is far harder, right? And no one is doing that. So can we partner with you? Because proof of impact doesn't do carbon accounting.

We need someone to really dive into the weeds and figure out, you know, what are the accounting. But they, those carbon accounting firms, they are getting requests from their clients. okay, carbon is one thing, but what about all my other, you know, areas that I'm trying to prove that I'm contributing on? So it's the understanding of what drives impact, how do you value impact, what's important impact? And then the third aspect is the technology side, right? So again, our team is heavily biased towards decentralized technologies and distributed ledger technology. And again, in those three in a row, so doing the hard work, having the impact intelligence, and then having, you know, the huge competency and desire to move to that decentralized finance

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to a bunch of program content that are going to make them better at their jobs. They also put you in a bedded community of your peers. You're going to get that networking. You're going to get your skills. You're going to get direct line of insight from leaders at the top companies across the tech industry. Reforge offers 16 programs built and led by top executives at companies like Uber, Slack, SurveyMonkey, Instacart and Tinder, you're going to be in great company. You want that promotion. You want that raise? Well, how are you going to show you deserve it?

You're going to show you deserve it by putting numbers on the board and you just put numbers on the board because you got those skills. So stay current on business trends and best practices. Join Reforge this summer. Their next cohort is starting July 18th. Apply for membership today at reforge.com slash twist. People ask me all the time. What should I invest in?

Yourself, Reforge.com slash twist. How much do you? as you look toward the future, you know, there's there's really a transitional moment around impact investing. There's increasing doubt in ESG metrics, as we know. There's a question of whether, at least in the U.S., there's going to be a crash in the, in, you know, these investments, and that there may end up being regulation. I know you're mostly working with private companies, and that really is the goal here,

but I wonder how much will the future sort of regulatory atmosphere, affect or improve your business potential in places like the U.S. Yeah. So one of the other businesses we set up between 2007 and, you know, now is this osmosis investment management fund, which is a $15 billion asset manager, which works in the public space. So I am very familiar with how that works there. Yeah.

And when people say that the ESG strategies don't work, right, we have to define what is an ESG strategy. Because if an ESG strategy is taking any strategy that you had already intended on executing on and then retrospectively labeling it with an E and S and a G, which shouldn't even be labeled within the same portfolio anyway, but that's another conversation, then of course that's going to crash because you're just labeling something. So it is literally putting lipstick on pigs, right? So that is never going to work. The movement that people want to get to is have a more genuine and I would say more upfront intentionality around if I invest. And it is a little bit more difficult in public markets because your capital is not directly

going into the company. Your capital is going to move what the company had originally raised around. It's secondary trading. If I buy your Tesla stock, Tesla does not get my money, right? So for that reason alone, investing in public markets is less intentional. it's less impactful, right? It might help a company indirectly with having a better access to more investors because people want to own the stock and therefore it can raise money better,

but it's not impactful directly, right? And I think that's a really important distinction to make. That we're not going to change. The only thing that we can change is that on the basis of which investment managers like Larry Fink choose to choose certain companies in their portfolio used to be just based on negative elimination, we don't do, you know, drugs. and gambling and fossil fuels. But it's moving towards,

can we get information from these public listed companies that are actually showing something positive, right? Do they have a positive? So that's a trend that's already happening. And we believe that as that trend gets reinforced, that trend will perform, right? Because more investors will want to see that in their portfolio and therefore positively select for companies who do that,

public markets. On the private market side, you're right. Like the jump that needs to happen in both cases, by the way, is that we move away from reporting to performance. So if this data, if a company is driven to improve their resource efficiency, if the company is driven to improve their diversity, because it makes business sense. And the investor therefore chooses that company because that makes investment sense.

We're there. And I think we are very, I always think we're very close. I've been thinking we're very close for 15 years. But I honestly, genuinely now think there is no excuse anymore not to behave in that way. It feels to me that the real, that we genuinely are on the cusp of the most important realization, which you have pointed out several times,

which is that impact is not concessionary, that in fact it is the only way to do business going forward. That's our North Star, so anyone that we hire, if they even show a little, little glimmer of thinking that they're working for some form of an NGO where, you know, this is something nice to have on the side, they can't work for us. Like our entire North Star is to direct capital to companies that matter.

They matter because they do the right thing and they do it very, very well, right? So this is the infrastructure that we want to build. So if we're successful, our kids will not even need to use the word impact because it will be embedded in any transaction that they engage with. When they buy a product from a supermarket, when they go to their, you know, digital accounts and they engage and they stake and they do whatever they do, the data will be visible. The proof will be there of the financial, the environmental, and the social performance of that particular assets.

And that's extremely exciting. And I think when we started, you know, thinking about proof of impact in 2017, 2018, we thought that that bit would happen faster, of course. You think that, you know, people would want to see this in digital form faster. And then it was a bit slow. But now that I'm in 2022, it's the classic. Like people underestimate what can happen in 10 years, but they overestimate what can happen in a year. So I think if you're looking at this world in 2007, I think what we are talking about now

will be a huge part of the financial markets. Fleur Haynes is the founder and CEO, Proof of Impact. Thanks so much for the time today. Thank you, Molly.