Beyond Impact Investing: The Case for Regenerative Capital
David Hodgson
Founder, The Gaian League - an ecosystem of innovators working towards a regenerative global economy. Founder, Mycelial - an AI-enabled platform for running regenerative innovation ecosystems.
In recent years, impact investing has gained significant traction in financial circles. The promise is appealing: generate positive social or environmental effects alongside financial returns. But as our planetary boundaries continue to strain and social inequities persist, we must ask ourselves: is impact investing enough?
The Limitations of Impact Investing
Impact investing, while well-intentioned, suffers from a fundamental flaw: it lacks a holistic framework. An impact investment might create jobs in Uganda while simultaneously driving significant climate damage. It might improve access to healthcare while depleting natural resources at an unsustainable rate.
The uncomfortable truth is that even if every dollar invested globally were labeled as "impact," humanity could still face catastrophe. Why? Because current impact frameworks are neither comprehensive nor adequately contextualized within the broader goal of creating a sustainable future for humanity.
Enter Regenerative Investing
Regenerative investing represents a paradigm shift. Rather than merely seeking to minimize harm or create isolated positive impacts, regenerative investing prioritizes ecological and social outcomes over financial returns.
This isn't about abandoning profitability – it's about reordering our priorities. Regenerative businesses can and should be financially viable, but their primary measure of success lies in their ability to restore ecosystems and strengthen communities.
Leading the Change
For this transformation to take root, individual investors must lead the way. Those with the privilege of capital have the power to redirect financial flows toward regenerative enterprises that might otherwise struggle to secure funding under traditional investment criteria.
Institutions will follow as evidence mounts that regenerative businesses can succeed, and as client demand shifts toward truly sustainable investment options. Eventually, policymakers will need to reframe regulations around fiduciary duty to acknowledge that long-term value creation necessarily includes environmental and social health.
Overcoming Obstacles
The greatest challenge we face is an inversion of the established paradigm. Financial managers have been trained to think in terms of risk-adjusted financial returns above all else. The concept of fiduciary responsibility, as currently interpreted, creates a significant roadblock to prioritizing ecological and social outcomes.
But let's remember that fiduciary duty is ultimately about acting in the best interests of clients. As climate change and social instability threaten the very foundations of our economy, can we truly say that maximizing short-term financial returns at the expense of living systems serves anyone's long-term interests?
The Path Forward
Moving to regenerative investing requires courage, creativity, and conviction. It means questioning deeply held assumptions about value, return, and purpose in our economic system.
For those ready to pioneer this approach, the rewards extend far beyond financial statements. The true return on regenerative investing is a world with thriving ecosystems, resilient communities, and an economy that serves life rather than depleting it.
The question isn't whether we can afford to embrace regenerative investing. Given the mounting evidence of our current system's unsustainability, the real question is: can we afford not to?
What regenerative businesses or investment approaches have caught your attention? Share your thoughts in the comments below.
Building Strategic Relations to Regenerate the Planet 📷 Media & Marketing for the New Earth ♻️ Supporting Reusable Zero Waste Solutions & Eliminating Single Use Plastic
2mo🙌🌱🌎
Governance guide for a regenerative future.
2moDoes the fact that policy makers have not reframed regulations around fiduciary duty to reflect regenerative principles pose a high risk of losing clients or even litigation to financial managers? Great comment thread. I particularly appreciated Helen Holden Slottje's insights.
Reimagining how we design, build and operate spaces for healing
2moA major part of this discussion revolves around the awareness that we operate in an incomplete economy - heavily weighted towards our financial and monetary systems - and ignores essential social, ecological, and human characteristics (or at least considers them externalities). The shift needed to influence "investing" requires a massive shift in our inner awareness. Becoming conscious that the systems we have built are epically lacking (or outright failing). It requires a remembering that we live in a complex ecosystem where EVERYTHING is intimately connected. We must move beyond ROI, IRR, etc. and yes, include things like socio- and ecological impact, BUT also essential human values like integrity, truth compassion, love, and authenticity.
Sustainability Strategy & Governance | Regenerative Business & Investments | Social Impact | Regenerative and Circular Economy | ESG Green Tech
3moRefreshing paradigm shift; prioritizing regeneration over linear impact 👏
The ReGenerOsa Collective is a group of people that commits to support all life in the Osa Peninsula by funding the local people that are in service to the community and biodiversity.
3moLove this framing thank you David Hodgson ….for us at the ReGenerOsa Collective the idea of regenerative investing is focused on liberating financial wealth from the constrains of the very narrow, and not all that exciting, return on financial capital and instead allow that capital to flow into the other forms of capital that the earth, communities and most marginalized folks have been offering for generations with little or no compensation….cultural, experiential, social, spiritual, living, material and intelectual. Based on our experience, the multiplier effect that is produced by even small streams of financial support provides a return on investment that we feel is the highest and safest of all other investment options.