Scarab Funds’ Theory of Change

 In Impact Investing, Sustainable Development Goals, Theory of Change

Without a substantive theory of change, any attempt to make a difference generally suffers mission drift, but having a clear set of goals and a timeline ensures practical success.

It is this theory of change – or Stated Purpose – that provides a basis for decisions that keeps an Investment Committee on course, no matter what obstacles or vagaries arise. Our sttagtegic goals and long range timeline at Scarab Funds, are aligned with the 17 Sustainable Development Goals (SDG’s) set forth by the UN and adopted globally with an eye to completion by 2030.  Our investor returns are much more liquid.

This is Scarab Funds’ Theory of Change.

At least U$1.4T/annum in new investments (adjusted for inflation) will be needed to achieve the SDG’s by 2030. This is in addition to the current $330B contributions from philanthropy.  Much of this new money could come from philanthropies, since simple math shows that standard US philanthropy gives away 5% of their assets and 20 X $330B is $6.6T.

If approximately a fifth of their endowments ($1.4T) were invested wisely and profitably in Mission Related Investments(MRI’s) the SDG goals could be reached. Scarab Funds demonstrates how SDG-centric MRI could be implemented in practice.

The $1.4T includes the cost of environmental clean-up and the establishment of sustainable infrastructure globally.

It also includes the research, development and establishment of new technological solutions to address the world’s problems in health, education, welfare, energy and relevant job creation.

Re-investment in beneficial product and service solutions is the most effective commercial and hence leading change-maker.

Proxy voting has achieved a great deal in making bad actors less bad. The recent EOG case in which the SEC would not allow Trillium’s resolution gives a death knell to this approach. Regardless, real direct change will come from these alternative investments in both private and public solutions that also provide investors with dual diversification and market aligned returns. Without this professionally managed approach $1.4T in new investments will not be achieved.

We recognise the need for a “paradigm shift” or “internal change in thinking” required for these goals to be truly successful and we are well aware of the associated challenge for many of us.  The change must include multiple layers in society.

First: Consumers will need to become supply chain educated to ask themselves: “who made this?” / “how were the workers treated (were they paid a living wage?)” / “are the ingredients healthy for me?” / “did the production of this item cause environmental harm or was it beneficial to nature and society?”.

Disclosure is therefore essential and this is already manifesting in the acceptance of block chain’s ability to provide independent veracity. Altruism will guide consumer behavior but big data will provide factual decision making tools.

Second: Macro social decision makers will need to be active and respectable. Political and commercial organizations will need to be ethically inspirating to consumers, voters and investors by being leaders not manipulators, i.e. lead the charge on what is needed now to transform society for the good of all.  Competition is already evolving into collaboration for the good of all driven largely by a more sensible gender lens focus .

Third: Intellectual change agents such as artists, writers, scientists and entrepreneurs will need to exhibit intuition about the future and be respected for their innovations and insights to create a future that is vibrant and diverse rather than perfectly homogenized and dehumanized. Creativity requires both a framework but also freedom, to be successful :  just like a commercial start-up.

Rather than focusing on one SDG goal at a time, we believe there is a need to model professional fund management with diverse impact themes in each asset class, with risk mitigation and diversification achieved by owning a mix of asset classes, all focused on addressing the SDG goals.  All Scarab’s current and future fund structures are designed to drive a more Future Fit capability where investment money and business needs and returns are more commercially and goal aligned.

In practice Scarab Funds’ holistic Theory of Change and our individual Portfolio Investment theses immediately drills down to specific business-led change even where there is a range of industries and asset classes of varied scale, private and public, across multiple geographies (Global All-Cap Fund).

Scarab Funds fosters holistic investors who believe that understanding the whole is an advantage and overseeing this range of possible investments. It is always a personal choice but must also provide solid financial return to be economically sustainable.

Scarab Funds believes in promoting a Future Fit® society; one where smart money is used to add financial value alongside environmental and social value.  Whether you are an advisor wanting to learn more about our high-yield alternative portfolio or an accredited investor / family office wanting direct investment into responsible investments, if you share our vision of the future, get in touch with us now.

You may also be interested in attending training programs we are running for advisors to explain impact investment returns!

Contact Scarab Funds at positiveimpact@scarabfunds.com or call on +1 (215) 452-8176 to have an honest conversation about impact capital and positive growth.

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