Neeraj Aggarwal started his profession in asset administration working for Macquarie Group and Rothschild & Co. However in 2014, he took a job as program director on the Michael & Susan Dell Basis. There he established a $60 million impression investing platform and later led the Rebuild Texas Fund, which offered support to 2 million victims within the aftermath of Hurricane Harvey in 2017. 

Seven years on the basis fueled Aggarwal’s ardour for making a distinction. So, when he returned to Australia in 2022, he prioritized working with a workforce with “true credibility” within the impression funding area. Aggarwal joined Australian Impression Investments as affiliate director in February 2022. 

Right here he talks about his position on the Sydney agency, what it takes to achieve the evolving discipline of impression evaluation, and why “impression DNA” is prime of his checklist on the subject of recruiting candidates. 

Shannon Houde: Impression investing has developed lots. How do you outline it?

Neeraj Aggarwal: The definition of impression investing is now so broad, it takes on many alternative interpretations relying on who you discuss to. I believe the perfect definition is from the World Impression Investing Community. They are saying that impression investments are made with the intention to generate measurable social and environmental impression alongside monetary returns. So, what separates it from philanthropy is that expectation of a monetary return again to the investor. 

There [also] must be tangible and measurable impression. There’s numerous greenwashing, or impression washing, with funds or firms saying that “we’re producing impression” or “we’re sustainable” [without measuring their impact]. However what actually defines impression investing is that measurability. Does the corporate or the fund have a measurement framework in place? Does it measure its outputs? Do the outputs hyperlink to outcomes, and are the outcomes linked to a concept of change?

What actually defines impression investing is that measurability.

The diploma of impression can differ between totally different investments; it is not essentially a binary classification. In reality, the business now makes use of one thing known as the Impression Spectrum, which has three courses of impression. The primary, A, is to keep away from hurt; B is to learn folks; and C is to contribute to options. A part of what I do on a day-to-day foundation is undergo funding portfolios, and assess property in keeping with A, B, and C.

Houde: Inform us a bit extra about what you do on a day-to-day foundation.

Aggarwal: I work with shoppers and evaluate their complete funding portfolios — not solely the small portion that is likely to be allotted in direction of impression investing. From that portfolio impression evaluation, I produce a visible for our shoppers that exhibits them their market threat and ESG publicity and prompts them into motion. 

Second, I conduct due diligence on personal market funding alternatives. That entails evaluating funds and direct investments for impression, threat and return, in social and environmental investments. 

For instance, I’m engaged on one proper now known as the Vitality Transition Fund, which invests in applied sciences that can allow the transition to internet zero. We’re going deep and understanding the property that make up that fund. We’re understanding the chance profile; we’re digging into the monetary mannequin and understanding the return profile. We’re interviewing the workforce and business consultants to know whether or not the fund can validate their impression and in addition doing desktop analysis to know how business practitioners and lecturers are excited about the transition. We’ll produce a full, complete due diligence report, which our shoppers will then use to make their funding selections. 

Houde: What are a few of the largest obstacles you’ve confronted in progressing your profession?  

Aggarwal: Impression investing continues to be very new. The time period itself is just 15 or 16 years outdated. So, the truth is that the majority organizations with their fund managers or conventional establishments are nonetheless attempting to determine what impression investing is. They’ve all acquired their very own definitions for it and after they’re hiring somebody, they do not all the time know exactly what they’re in search of.

But it surely’s a possibility as nicely since you get to outline the position for your self. That’s what I ended up doing. To search out the job you need, that matches your flexibility, that matches your ability set and your values, you have to be crystal clear about exactly what you’re in search of.  

Houde: For individuals who are interested by moving into the impression funding area, is it attainable to take action and not using a monetary background? 

Aggarwal: Sure, completely there are alternatives. There are two halves to the position — funding and material data. To be in a front-office funding position, it’s possible you’ll have to have that monetary background. However I’ve additionally seen folks overcome a scarcity of funding background with their business or subject-matter data. With the Vitality Transition Fund, for instance, neither of the leaders have an funding background; however they’ve an enormous quantity of expertise in battery storage and hydropower applied sciences.

It’s why you needed to enter into the impression sector and your lived expertise.

On the asset proprietor’s facet, my facet, we solely have two members of the workforce with an funding background. My colleague, who leads due diligence, began off as a sports activities scientist, then labored as a wealth adviser and progressively constructed up his ability base and has transitioned to main funding analysis. 

A fund has many further roles inside it as nicely. Relying on the scale, it could have an effect measurement and administration position devoted to measuring the fund’s impression. It could have an investor relations position, which is not as technical. And there may additionally be founders, with startup experience or expertise. A non-public fairness fund would possibly search for folks with consulting backgrounds, business experience, or individuals who have expertise working inside company companies. 

The impression facet attracts upon lots of the parts of the usual funding diligence course of, however, frankly, that may be realized in the event you’re working with the fitting chief. What’s more durable to study is impression DNA. That’s the very first thing that we have a look at in hiring. 

Houde: What do you imply by impression DNA? And the way would somebody know if they’ve it? 

Aggarwal: Impression DNA is about authenticity. It’s why you needed to enter into the impression sector and your lived expertise. For me, it took a very long time to seek out my story. After I was in college, I interned for a rural improvement middle at a Girls’s World Improvement Centre in north India. I actually needed to try this work, however I did not have the ability set essential to make a distinction. Coming again to Australia and dealing in funding banking was a option to construct up that ability set. 

However the seed was planted in 2006, working in rural India. My religion comes into it as nicely. I am a Hindu and a part of my religion focuses on service and that’s actually core to how I take into consideration this work, and the way I get impressed and motivated by it. 

That’s my story. However totally different folks have a distinct journey. Rather a lot have been by way of a sure expertise that pertains to impression. For instance, I’m working with a founder proper now who has a psychological well being concern, which is why he’s devoting his time and power in direction of a specific enterprise. I am working with one other founder who has lived expertise of alcohol dependency and is engaged on an alcohol detox program and convention known as Clear Slate Clinic. The way in which she tells her story is phenomenal. 

It is laborious to quantify, however it’s about digging deep and saying, “Why do I need to do that work? Who am I attempting to serve? What am I attempting to serve?”