Sir Ronald Cohen book review

Vibeka Mair reflects on Impact, the latest book from the ‘father of social investment’

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Today, Apple is worth more than the combined value of the global Oil & Gas majors. The continuing rise of the ‘new tech’ economy is meteoric and life-changing. In 2019, for the first time, Americans spent more time watching their mobile devices than TV, and more than half the global population were identified as internet users.  

Sir Ronald Cohen, private equity pioneer, philanthropist and innovator, spotlights the “tech revolution” in his new book Impact, drawing parallels with the new “impact revolution” which he says will be as dramatic and transformative over the coming years. He was a young finance leader during the start of the tech expansion, investing early-stage in companies like Apple and AOL, through Apax Partners, the private equity giant he founded at just 26. 

He predicts the domination of new tech companies like Amazon, Apple and Facebook will be replicated by “impact companies” solving societal and environmental challenges – a movement he has been integral in catalysing. Explaining his long standing personal commitment to tackling social issues and helping to try and resolve conflict in the Middle East in the book, he says: “I did not want my epitaph to read ‘He delivered a 30 per cent annual return on investment’”.   

Impact details the role companies, investors, government and civil society can play in the ‘impact revolution’. It’s essentially a manifesto to reshape capitalism, mixing heartwarming stories of the difference impact companies can make with the hard business case for the movement. 

‘Impact-weighted accounts’, a new innovation described in the book, are an effort to try and create a comparable way to monetise the impact that companies have on people and the environment.

Early sampling, using publicly available data, shows that while Exxon Mobil’s revenue in 2018 was $279bn, its environmental cost was estimated to be around $38bn. In comparison, Shell’s revenue in the same year was $330bn with an environmental cost of $22bn. Sir Ronald says this measurement “can shed light on the true performance of companies”.  

But, while comprehensive, the book presents a rose-tinted view of the impact investment movement. It doesn’t address the potential uncomfortableness of putting a price tag on the environment or people; the innovation of social impact bonds are well covered, but not some of their setbacks. Tesla’s Elon Musk is lauded for his positive disruption for the environment in the automobile industry through electric vehicles, but while  “idiosyncrasies and challenges” are mentioned, the book doesn’t address the serious negative social impacts of the electric vehicles industry through its reliance on the mining of precious minerals. 

The book illustrates the self-defeating cycle of investors and companies focusing only on making money, and governments taxing everyone to solve the huge social and environmental problems they cause; but it doesn’t really analyse if there is a role in making sure companies pay their fair of share tax – although it does write about tax incentives to encourage impact investments.

Impact’s launch comes as economies shut down by Covid-19 are trying to reopen, and conversations are happening about how economic measures should change going forward. The “forceful challenge” to capitalism and democracy that Sir Ronald describes in the book is accelerating, and his argument for a move beyond ‘selfish capitalism’ to ‘impact capitalism’ comes at the right time. 

Influential thinkers like John Maynard Keynes, Jean-Jacques Rousseau and Adam Smith,, had powerful ideas that prompted radical change, such as the ‘invisible hand of the markets’ in The Wealth of Nations. Impact notes a lesser-known fact – that Smith also wrote about humans being naturally social and empathetic in The Theory of Moral Sentiments. Sir Ronald calls this ‘the invisible heart of the markets’, as he calls for a systemic change through the development of impact economies.