In this episode of Be & Think in the House of Trust, I am listening to Daniela Soares, the CEO of Snowball Impact Management, a diversified investment fund that creates positive outcomes for people and planet whilst generating competitive financial returns.

Daniela is also, among other things, a non-executive director at Inter-Continental Hotels Group PLC, a trustee of the Institute for the Future of Work, and she is executive chair of Gov Digital, a private technology business working with the public sector to improve social services in Brazil.

Daniela and I explore why transparency is important when we lead on investments. There is no time to rearrange the chairs on the deck of the Titanic, no time for impact washing. Having the discipline to embrace transparency is a force for good.

Highlights from this episode:

• (03:25) Passion alone is not enough. You need to add discipline
• (05:16) What are the real risks?
• (00:13) I resist this idea that we're powerless in the system
• (15:05) Holding the investment industry to account
• (21:29) Be naked when investing?

Useful Links

Follow Daniela Barone Soares on Linkedin: https://www.linkedin.com/in/daniela-barone-soares

Discover Snowball Impact Management https://www.snowball.im/

Follow Servane on Linkedin https://www.linkedin.com/in/servanemouazan/

and at Conscious Innovation https://www.servanemouazan.co.uk/

Connect with Servane:

LinkedIn: https://www.linkedin.com/in/servanemouazan/

Website: https://servanemouazan.co.uk

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Episode 14 - Embracing the Challenge of Transparency with Daniela Soares

Servane: Or to be transparent when we lead on investments that tackle today's and tomorrow's thorny problems. All the topics that contribute to igniting a positive impact

Servane: You were also the c e O at Impetus, private Equity Foundation, and, uh, executive chair of Gov Digital, a private technology business working with the public sector to improve social services in Brazil. I mean, you've got a lot of practice across commercial and nonprofit boards and advisory boards in various countries.

Servane: I'm curious about what, what could business looks like? How can we think about things differently? What would investing looks like? And, and really, I have a almost child. Perennial, um, curiosity about the human spirit and, and what the human spirit can do and can achieve. So what makes us move? How do we connect with what is best in us?

Servane: You dropped that quote, your passion alone is not enough, really, because you have to combine passion with discipline, and usually those two words don't really go together. Do you still agree with that? Yeah, I do. I, I really, really do. I mean, because I think otherwise you really don't achieve. I don't think you achieve stuff with passion alone, you know, because it's almost like it becomes very impulsive.

Daniela: It becomes from the hug it's needed, it don't get me wrong, passion is so important, and I don't get up in the morning if I'm not passionate about what I'm doing and, and the things that I'm, I'm contributing to, but at the same time, you do. To get the discipline, to get people to work together, to kind of see how you can change.

Servane: Mm. I love that. I love that. And I said I, I know that the rigor and discipline is something that you apply consistently. So I wonder, um, that quote was addressed to social entrepreneurs and I wonder what is the discipline that is required from your peers, you know, all the investors, or informed investors in general, or impact investors.

Daniela: I think sort of over, you know, the last. Say 10 years. I guess the consideration of. What the, the financial loss, but also the reputation risk, but also the kind of, they've been blindsided by some losses, uh, stemming from, uh, the, you know, lack of environmental awareness, breaking social, you know, communities or lack of good governance.

Daniela: So if I, for example, if I don't pay tax as a corporate, what is the risk of my to my future cash flows? So this is kind of e s G, right? So you're looking at still, you're looking. Inside the company for assessing those risks, even if they're coming from outside sometimes. But what hasn't been really priced in, I feel, is the long-term risks that we are aware of that science has been telling us there is an unprecedented, I think this year the number of humanitarian, uh, people running from humanitarian crisis [00:07:00] is bigger than it would be.

Daniela: Uh, the fifth largest country in the world, just a number of people running away from hunger, from war, from from, you know, from persecution, right? Um, and poverty. So those long-term risks. I don't think are being well priced in assets today and in, in terms of investors. So what we do at Snowball and what are the long, those long-term risks, right?

Daniela Uh, the company has a risk profile in relation to the world, right? So the activities of the company can exacerbate the problems of the world. They can accelerate. The problems are the opposite, and where we focus is we think there is. We, again, it's sort of on my personal side. I believe in humanity and human ingenuity and creativity and the ability to innovate and find solutions.

Servane: So the digital discipline is about internalizing externalities.

Daniela Yeah. That's a good way of putting it. You know, understanding them, internalizing them, and then pricing that into your investments so that whatever you are doing is taking the world into account. Hmm. So we, we talked, uh, lately and, and there is, uh, and in midst of the, in the middle of our discussion still, you see there's a lot of rearranging the chairs on the deck, the Titanic.

Servane: Can you share more about that?

Daniela: And create an innovation center, like an innovation lab for the businesses of the future. Uh, and we had to do this outside of the company because they were fully aware that the company's antibodies would kill those ideas before they could fly. And take hold because of course the is an antibody to try and protect the current business.

Daniela: The business as usual. The business as we've always seen because hu humans fear change. Even though life is all about change, we all fear change, right? And that disruption and all of that. And I think. The financial industry largely, and there are exceptions to this of course, right? But it's largely trying to rearrange the deck on the Titanic so that we actually don't disrupt the bigger model, right?

Servane: Do you think that's, uh, the problem is that individuals within organization, Just a bit too shy of disrupting because they don't want to wake up these antibodies and, and just settle in and don't change much or it's a little bit nice. Nice. But it's not much.

Daniela I don't think it's individuals. I actually think there's a lot of courage and there is a lot of individuals that are willing to do that.

Daniela: Work it out and figure out, wait a minute, if I go down that route, is, is that gonna, is that gonna be harder? Oh, there's a blockage here in the road. What do I do about it? So it's almost like, uh, and, and every time you're faced with a different kind of resistance, you know, so I think it's the same. I, I think it's yes, individuals Power if they want and they need to want it. And there is a lot of sort of fear, but I think sort of there is a bigger, a bigger machine of how the world works, let's say. You know, that kind of makes it harder to change, fundamentally change, you know? So if we're saying it's not impossible, we've changed a million, million times, right?[00:13:00]

Daniela So it's not impossible, it's just that we need to be aware of. We need to be aware of it so that we regain the power to change both within our lives, in our jobs, and then to influence, you know, what is around us. Because I kind of also, I also resist this idea that we're powerless in the system. No, we have our power.

Daniela: I did a, a course on sort of, uh, stress management many years ago, and, uh, there was a definition of stress that I. because I hated it at the time, but I love it Al and I hated it cause I was stressed and I wanted to manage my stress better. And all this quote says is that, uh, you create your own stress, thank you very much.

Daniela : Most people would love to live in a world where they know companies are, you know, delivering good for, you know. As an investment proposition, but really good for the world. You know, most people care about their children. Most people care about life, right? And it's sort of like, so to understand that how do I exercise my power to, to change this?

Servane: It just, it's something that I come across quite often in my conversation, my coaching conversation, support, conversation with individuals or groups is that once you start to peel the onion of assumptions, you make great discoveries that what you believe it's true is actually immaterial and you can.

Servane Start to shape a new assumption that is true in liberating instead. And that, and that, that gave me a fantastic segway with something that happened recently. Uh, snowball is something probably that helps, uh, change your, um, the perception that we have on, on a sector, on the sector. And it's all about transparency.

Servane: There's a ripple effect still at play here. So in short, you said you did this to hold yourselves and the investment industry to account and I. What challenge do you want to bring about here that that would continue, that would help shift the needle?

Daniela Yes. It's so interesting because we debated this internally, of course.

Daniela: Right? Um, you know, first of all, we did the, we did the independent verification for ourselves. We wanted to, you know, we published an impact report. Uh, it's out of the, the third of a trilogy. We. Published an impact report with the Impact Management Project on the enterprise Impact and we published an uh, a report on the fund manager's impact.

Daniela: Uh, and we decided it. Like a butterflies in our stomach. But it was, you know, the, the, the verification of our impact process, which is, you know, what we do well, what we don't do well, you know, the good, the bad, and the ugly, and do we walk or talk, you know, so it's there for investors, for peers to see and.

Daniela Well, do we need to do this? Must we do this? Are we regula?ted Is regulation requiring us to do it? If not, we shouldn't do it. Sounds, sounds a bit risk averse, doesn't it? Sorry. Yeah. It's because like people don't like to be exposed to scrutiny. Right? That's what it does. You know, you put anything out there, you're exposing yourself, right?

S Daniela: Tried to have that integrity with sort of optimizing for risk. Impact. We feel that, especially in the impact, uh, side of it, we can't have this mindset of, you know, uh, why should, why should we do it? We should be asking ourselves why shouldn't we, you know? Cause, because we need to accelerate a better way to invest.

Daniela: We feel that what we're doing is not a niche way to invest is a better way, is a way that takes into. Everything and still provides a good return. You know, a competitive return, a compelling return, and it's one that takes into account nature and takes into account humanity. So our mindset is that we need to share, we need to collaborate, and we need to multiply what works.

Daniela: And, and, and that means, you know, Exposing ourselves, being a bit vulnerable, being more open, being more human, but also realizing that it's bigger than us. You know, what we're doing here shouldn't just be about, you know, oh, let me protect my little corner. Let us be just the one successful company. You know, there is 1%.

Daniela: We need to empower the investor to understand so that the investor can judge and make decisions and feel more comfortable about investing in those organizations that are proposing something that is such a better way that it looks too good to be true, but it's not. Mm-hmm. .

Servane You know, there's the word investing, um, that literally has its roots in putting a, a, a clothes on. You know, something like to dress up, to dress, put some dress on to fulfill a function or a job or aspiration. But it feels sometimes that it's become a asphyxiating piece of cloth that prevents you from, you know, actually releasing the butterfly in the garden. You ought to be more naked than. Right?

Daniela Oh, I loved this and I never, I have never heard this before of investing, like putting the vest on or in or, or something like that. Yes. No, I agree. I think sort of one of the things that. That sort of, again, our governance, uh, is set out to do is for us to be accountable and, and we are big advocates of transparency.

Daniela Right. They hear something that is, everything is working in a, like for example, we have nothing to improve. Everything is perfect. We have, we are the best and we, you know, we got the best is the best that and the best the other. And there is nothing that we need to learn or improve. I think. You know, nobody believes it anymore.

Daniela: So I think, you know, we do need to be a bit more naked. Uh, to your point, I think we do need to show a little bit, you know, a little boob here and there, you know, actually, you know,

Servane: circling back to what you were saying at the beginning, uh, as a curious, humanist, you, you, yeah. Release a little bit of skin and make nakedness and just train your antibodies.

Daniela: You know, they've been on, they've been going on for a long time, and I. For them is, is, is, but it doesn't mean they also cannot change or improve and, and I think the call of the time, the call of where we are today and right now is that we need to be faster and last incrementalist. We need to sort of, for the things that are good and the things that we need to leave, we need to be faster.

Daniela And people that have strong antibodies, organizations, families that have strong antibodies, you kind of have to, what is the, what is the spark? What is the grit in the oyster you can put so that it starts to create that change that will become a pearl in your own? You know, in your own way for good, in whatever way you can contribute for sort of, you know, the problems that are, that we see all around us.

We're just, that's Brazilian in me, there's no Escape, . Watch more.

Servane: Thank you so much, Daniela. Thank you.

Daniela Thank you, Servane. All the best.

Servane: I loved hearing Daniella. Take us through the new type of discipline that is required from people who love to invest in social change. And it's certainly not about rearranging the chairs on the deck of the Titanic. It's about paying attention to creativity and imagineering.

Servane: It's about encouraging organizations to not fire antibodies outta fear of change. To let ideas fly and take hold. It's about experimenting with courage and to do this in all transparency. So while you experiment, you take the world into account and where it's going, and you don't just take care of your pockets.

Servane: It's available wherever you find your favorite podcasts. And just look for be and thank in the House of Trust. My name is Servane Mouazan And I wish you well, until next time!