Building a Financial Sector that Serves People and the Planet

We believe improved financial markets can reduce—rather than exacerbate—poverty, inequality, and environmental degradation.

Toward these ends, we:

  • Advocate for financial institutions to quantitatively optimize social and environmental impact alongside financial risk and return, providing a blueprint through our "Efficient Impact Frontier."
  • Create a thriving, sustainable, and transparent financial market to serve needy agricultural businesses through the Council on Smallholder Agricultural Finance.

Efficient Impact Frontier

We believe that combining the rigor of financial markets with values of social justice, equality of opportunity, and environmental health is not only possible—it's vital.

Like the mainstream financial sector, Root Capital manages financial risk and return. But we integrate social and environmental impact into the standard risk-return framework in a way that is both quantitative and holistic. We have found a way to integrate people and the natural environment into the formulas we use to make financial decisions. And we are helping to get the word out to inspire others to do the same.

We published our approach in a feature article in the Winter 2017 Stanford Social Innovation Review, titled “Toward the Efficient Impact Frontier.” Since then, Root Capital staff members have presented the approach at dozens of conferences, industry groups, financial institutions, nonprofits, and schools. The article has been incorporated into syllabi in graduate programs in business and policy, including at Harvard and Yale. We have also developed a participatory simulation that allows participants to step into the shoes of an impact investor, and build their own portfolio of loans based on data about those loans’ impact, financial risk, and financial return.

Council on Smallholder Agricultural Finance

The Council on Smallholder Agricultural Finance (CSAF) is an alliance of social lending institutions focused on agricultural businesses that lack sufficient access to capital in developing countries. CSAF members exchange learning, identify best practices, and develop industry standards across three areas:

  • Market growth to meet a greater share of the vast financing need of the world’s 450 million smallholder farmers. In 2016, CSAF members and affiliates provided $682 million in loans to 775 small and medium-sized businesses across 65 countries.
  • Responsible lending principles promoting market growth that contributes to positive impact on agricultural businesses, the smallholder farmers they aggregate, and long-term sustainability of the sector. Council members have drafted a set of Responsible Lending Principles for impact-first agricultural lenders.
  • Social and environmental impact for farm households, their communities, and the ecosystems on which we all depend. Council members have identified a set of five impact metrics that they collect and share on an annual basis. These metrics will form the basis for deeper impact analysis in the future.