Neeraj Aggarwal began his career in asset management working for Macquarie Neighborhood and Rothschild & Co. Nonetheless in 2014, he took a job as program director at the Michael & Susan Dell Foundation. There he established a $60 million impact investing platform and later led the Rebuild Texas Fund, which supplied encourage to 2 million victims in the aftermath of Typhoon Harvey in 2017.
Seven years at the basis fueled Aggarwal’s passion for making a inequity. So, when he returned to Australia in 2022, he prioritized working with a group with “real credibility” in the impact funding space. Aggarwal joined Australian Impact Investments as affiliate director in February 2022.
Right here he talks about his role at the Sydney agency, what it takes to achieve the evolving self-discipline of impact evaluate, and why “impact DNA” is top of his record by blueprint of recruiting candidates.
Shannon Houde: Impact investing has developed plenty. How attain you clarify it?
Neeraj Aggarwal: The definition of impact investing is now so mammoth, it takes on many diversified interpretations reckoning on who you talk over with. I believe the fully definition is from the Global Impact Investing Network. They issue that impact investments are made so as to generate measurable social and environmental impact alongside financial returns. So, what separates it from philanthropy is that expectation of a financial return encourage to the investor.
There [also] desires to be tangible and measurable impact. There’s plenty of greenwashing, or impact washing, with funds or companies announcing that “we’re generating impact” or “we’re sustainable” [without measuring their impact]. Nonetheless what the truth is defines impact investing is that measurability. Does the company or the fund possess a size framework in place of abode? Does it measure its outputs? Enact the outputs hyperlink to outcomes, and are the outcomes linked to a idea of trade?
What the truth is defines impact investing is that measurability.
The diploma of impact can vary between diversified investments; it’s a long way never necessarily a binary classification. Truly, the alternate now makes utilize of one thing called the Impact Spectrum, which has three classes of impact. The critical, A, is to preserve away from damage; B is to relief of us; and C is to contribute to alternatives. Portion of what I attain on a day-to-day basis is undergo funding portfolios, and assess sources per A, B, and C.
Houde: Expose us a bit extra about what you attain on a day-to-day basis.
Aggarwal: I work with buyers and evaluation their whole funding portfolios — not fully the itsy-bitsy share which would perhaps be distributed in direction of impact investing. From that portfolio impact evaluation, I invent a visual for our buyers that shows them their market risk and ESG publicity and prompts them into motion.
Second, I habits due diligence on internal most market funding opportunities. That choices evaluating funds and order investments for impact, risk and return, in social and environmental investments.
Shall we embrace, I’m engaged on one factual now called the Vitality Transition Fund, which invests in applied sciences that will allow the transition to find zero. We’re going deep and figuring out the sources that set apart up that fund. We’re figuring out the risk profile; we’re digging into the financial model and figuring out the return profile. We’re interviewing the group and alternate consultants to realise whether the fund can validate their impact and apart from doing desktop examine to know how alternate practitioners and lecturers are inquisitive about the transition. We’ll invent a full, comprehensive due diligence fable, which our buyers will then utilize to set apart their funding decisions.
Houde: What are about a of the greatest boundaries you’ve confronted in progressing your career?
Aggarwal: Impact investing is serene very original. The term itself is fully 15 or 16 years ancient. So, the truth is that nearly all organizations with their fund managers or worn institutions are serene making an strive to determine what impact investing is. They’ve all acquired their very possess definitions for it and when they’re hiring someone, they devise not always know exactly what they’re procuring for.
Nonetheless it absolutely’s a likelihood as neatly because you glean to clarify the role for yourself. That’s what I stopped up doing. To search out the job you desire, that matches your flexibility, that matches your skill space and your values, you desires to be crystal sure about exactly what you’re procuring for.
Houde: For of us who are fervent about coming into into the impact funding space, is it doable to achieve so with out a financial background?
Aggarwal: Yes, absolutely there are opportunities. There are two halves to the role — funding and self-discipline topic recordsdata. To be in a entrance-place of abode of work funding role, you are going to also honest prefer to possess that financial background. Nonetheless I’ve also viewed of us overcome a lack of funding background with their alternate or self-discipline-topic recordsdata. With the Vitality Transition Fund, to illustrate, neither of the leaders possess an funding background; however they possess got a extensive quantity of abilities in battery storage and hydropower applied sciences.
It’s why you main to enter into the impact sector and your lived abilities.
On the asset owner’s aspect, my aspect, we fully possess two contributors of the group with an funding background. My colleague, who leads due diligence, began off as a sports actions scientist, then worked as a wealth adviser and progressively constructed up his skill heinous and has transitioned to leading funding examine.
A fund has many further roles within it as neatly. Relying on the scale, it would possibly perhaps perhaps in all probability well even honest possess an impact size and management role devoted to measuring the fund’s impact. It would also honest possess an investor kinfolk role, which is never always as technical. And there would possibly perhaps presumably presumably also honest moreover be founders, with startup abilities or abilities. A internal most equity fund would possibly perhaps presumably gape for folk with consulting backgrounds, alternate abilities, or of us that possess abilities working within corporate companies.
The impact aspect attracts upon loads of the blueprint of the customary funding diligence job, however, frankly, which will moreover be realized even as you’re working with the factual chief. What’s extra tough to learn is impact DNA. That’s the first thing that we gape at in hiring.
Houde: What attain you imply by impact DNA? And the draw in which would someone know in the occasion that they possess got it?
Aggarwal: Impact DNA is ready authenticity. It’s why you main to enter into the impact sector and your lived abilities. For me, it took an extraordinarily long time to fetch my fable. When I used to be as soon as in college, I interned for a rural trend middle at a Females’s World Pattern Centre in north India. I the truth is main to achieve that work, however I did not possess the skill space wanted to set apart a inequity. Coming encourage to Australia and dealing in funding banking was as soon as a type to amass that skill space.
Nonetheless the seed was as soon as planted in 2006, working in rural India. My faith comes into it as neatly. I’m a Hindu and share of my faith makes a speciality of service and that’s the truth is core to how I believe this work, and how I glean inspired and motivated by it.
That’s my fable. Nonetheless diversified of us possess a sure slip. Loads had been via a sure abilities that relates to affect. Shall we embrace, I’m working with a founder factual now who has a mental neatly being scenario, which is why he’s devoting his time and vitality in direction of a enlighten project. I’m working with one other founder who has lived abilities of alcohol dependency and is engaged on an alcohol detox program and conference called Intellectual Slate Hospital. The blueprint she tells her fable is extra special.
It be not easy to quantify, however it absolutely’s about digging deep and announcing, “Why attain I desire to achieve this work? Who am I making an strive to abet? What am I making an strive to abet?”