How Impact Investing Quietly Took Over $40 Trillion—and What Happens Next | Sir Ronald Cohen (Fan Fav)

Summary

Impact Theory: How Impact Investing Quietly Took Over $40 Trillion—and What Happens Next | Sir Ronald Cohen

Podcast: Impact Theory
Host: Tom Bilyeu
Guest: Sir Ronald Cohen
Date: November 8, 2025

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Episode Overview

In this engaging episode, Tom Bilyeu sits down with Sir Ronald Cohen, renowned venture capitalist and pioneering architect of the modern impact investing movement. The discussion explores the rapid rise of impact investing—now a $40 trillion force—what it means for capitalism, and the social and economic future. The episode is packed with practical insights, data, and Sir Ronald’s personal journey from refugee to global financier and impact leader. It’s a must-listen for anyone interested in the mechanics of markets, social change through business, and navigating the next era of capitalism.

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Key Discussion Points & Insights

1. Defining Impact Investing & Its Historical Context

• Sir Ronald Cohen introduces impact investing as the integration of impact, risk, and return—transforming both investor and corporate behavior ([01:40]):

  "We've had a technology revolution...this technology revolution is being followed by an impact revolution now where companies just making money isn't good enough. They've got to make money and they've got to make a contribution to solving some of our problems." — Sir Ronald Cohen [02:29]

• Young consumers and investors now demand values-based business behavior; this is forcing companies, for profit reasons, to account for social and environmental impact.

• Historical development:

  • The concept of risk measurement in investing is only about 50 years old—impact is the next frontier.
  • Standardized accounting (GAAP) only emerged post-1929 crash, showing how mutable financial systems are ([07:01], [09:10]).

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2. Personal Journey: Refugee to Venture Capitalist

• Sir Ronald shares his refugee story, highlighting adversity and opportunity ([04:25]):

  "At the age of 11, my family and I were kicked out of Egypt...We ended up in Britain because my mother had a Jewish passport... I went to state schools. My education was paid for at Oxford... I discovered venture capital... and I brought it back to the UK." — Sir Ronald Cohen [04:25]

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3. Venture Capital, Measurement, and Market Change

• Venture capital was considered risky until tools for risk measurement emerged ([07:01]).
• As with risk, measuring impact is now possible due to data and computing power, enabling transparency in social and environmental effects ([14:18]):

  "Big data and computing power enable us to do this. Previously, we couldn't have done it." — Sir Ronald Cohen [14:18]

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4. Impact Investing in Practice: What to Look For

• Concrete advice for consumers, workers, and investors ([15:10]):

  • Evaluate products: Is the company causing harm or good?
  • Assess employment practices: Diversity, pay equity, advancement opportunities.
  • Scrutinize operations: Environmental stewardship, pollution, carbon footprint.

  "Soon you'll be able to hold up your phone to the barcode ... and you will see the environmental and people impact of that product." — Sir Ronald Cohen [15:22]

• Companies that proactively do good attract talent, investors, and customers, and avoid regulatory backlash.

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5. Taxation vs. Market Incentives

• On why taxing the rich alone won’t fix systemic problems ([17:53]):

  "However much government stacks, it's a tiny proportion of what companies produce through their products and through their employment and through their operations... But if companies begin to compete with one another on the basis of diversity, of equal pay, of low carbon emissions, then investors bring that change about for you." — Sir Ronald Cohen [18:13]

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6. The Birth of Social Impact Bonds

• Sir Ronald describes creating Social Impact Bonds, channeling private capital for measurable social outcomes ([20:43]):

  • Instead of just giving grants, philanthropy can leverage investments where returns are tied to social results—e.g., reducing recidivism, keeping kids in school.

  "We said you can have an investment where your return depends on reducing number of prisoners going into prison, reducing number of kids who drop out of school, increasing number of people who are off the street and into jobs, etc." — Sir Ronald Cohen [21:23]

• Early data: 250/1800 major companies create more environmental damage than profit; 600 create environmental damage worth a quarter or more of their profit.

  "Together the 1800 create $3 trillion of damage a year environmentally." — Sir Ronald Cohen [24:47]

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7. Capitalism: Reform, Not Replacement

• Tom asks if Sir Ronald is a "proponent" of capitalism, given its contemporary criticism ([27:55]).
• Sir Ronald advocates reform—adding impact to risk and return—not abolition:

  "It's two cheers for capitalism rather than three... we can’t let capitalism be driven by profit only." — Sir Ronald Cohen [28:05]

  • Markets excel at generating prosperity, but without impact, they create unsustainable externalities.
  • Government is needed to enforce standardized impact reporting, akin to how accounting standards are enforced ([31:22]).

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8. Why Not Socialism or Communism?

• Sir Ronald details why communism ("the state owns all of the production resources") stifles innovation due to flawed human motivation assumptions ([33:38]).

  "If you plan everything for people, you kill innovation and entrepreneurship, the ability to think out of the box..." — Sir Ronald Cohen [33:54]

  • Capitalism succeeds by aligning with humans' inherent drive to strive and innovate.
  • However, redistribution of wealth (taxes) is necessary for fairness, but not so excessive that it kills incentive.

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9. The Limitations of Philanthropy & The Power of Aligned Incentives

• Tom critiques traditional philanthropy for lack of scalability ([38:46]), which Sir Ronald affirms:

  "All the charitable organizations they're funding are small and have no money. Is that sign of a system that works? No." — Sir Ronald Cohen [21:04]

• Aligning "selfish desires" in a system that incentivizes both profit and positive impact is the key to scalable, sustainable progress.

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10. Resilience, Striving, and the Need to Reskill

• Sir Ronald, reflecting on his father's forced restart as a refugee, frames resilience and "striving"—the natural human impulse to better one's circumstances ([40:47]):

  "My dad never complained... He wanted to create a business of his own, which he eventually did... Education is the only possession that can't be taken away from you." — Sir Ronald Cohen [40:47]

• On layoffs, automation, and economic dislocation: Humans must embrace continual reskilling ([46:14]).
  • Impact investing and innovation (such as Career Impact Bonds) can simultaneously elevate marginalized groups and return value.

  "We have to build ourselves into people who are constantly sensitive to where the opportunities are..." — Sir Ronald Cohen [46:27]

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11. Looking to the Future: Evolution in Economic Systems

• Sir Ronald sees the move to "risk, return, and impact" as both necessary and beneficial ([37:50]):

  "Risk, return and impact will actually deliver, in my humble opinion, better growth and profits... The rules of the game are changing." — Sir Ronald Cohen [37:54]

• There’s no “final system”—societies should take what works, measure, iterate, and evolve ([51:36]):

  “If we find communist systems that work in the future and do a better job of it, then we have time to look at their methods and adopt them.” — Sir Ronald Cohen [51:50]

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Notable Quotes & Memorable Moments

| Timestamp | Quote | Speaker | |-----------|-------|---------| | [02:29] | "We've had a technology revolution...this technology revolution is being followed by an impact revolution now where companies just making money isn't good enough." | Sir Ronald Cohen | | [14:18] | "Big data and computing power enable us to do this. Previously, we couldn't have done it." | Sir Ronald Cohen | | [15:22] | “Soon you'll be able to hold up your phone to the barcode ... and you will see the environmental and people impact of that product.” | Sir Ronald Cohen | | [18:13] | “However much government stacks, it’s a tiny proportion of what companies produce... But if companies begin to compete with one another on the basis of diversity, of equal pay, of low carbon emissions, then investors bring that change about for you.” | Sir Ronald Cohen | | [24:47] | "Together the 1800 create $3 trillion of damage a year environmentally." | Sir Ronald Cohen | | [28:05] | "It's two cheers for capitalism rather than three... we can’t let capitalism be driven by profit only." | Sir Ronald Cohen | | [33:54] | “If you plan everything for people, you kill innovation and entrepreneurship, the ability to think out of the box...” | Sir Ronald Cohen | | [40:47] | "My dad never complained... He wanted to create a business of his own, which he eventually did... Education is the only possession that can’t be taken away from you." | Sir Ronald Cohen | | [46:27] | "We have to build ourselves into people who are constantly sensitive to where the opportunities are and how they can put themselves in a position to take advantage of them." | Sir Ronald Cohen | | [51:50] | “If we find communist systems that work in the future and do a better job of it, then we have time to look at their methods and adopt them.” | Sir Ronald Cohen | | [52:38] | “All of the profits are going to all the royalties are going to impact charities. Spread the word about explains how all these pieces fit together. And you have each of you a major role to play in this impact revolution as consumers, as employers, as investors, as government officials.” | Sir Ronald Cohen |

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Timestamps for Important Segments

• 01:40 — What is impact investing?
• 04:25 — Sir Ronald’s refugee background and venture capital origins
• 07:01 — Evolution of risk measurement and venture capital
• 14:18 — Tech enables impact measurement
• 15:10 — What individuals should look for in companies
• 17:53 — Why taxation isn’t enough
• 20:43 — Social Impact Bonds: how private capital can serve public good
• 24:47 — Shocking numbers: environmental damage by major companies
• 27:55 — The case for capitalism and its reform
• 33:38 — Why communism and deep socialism fail
• 38:46 — Philanthropy’s limitations; incentive alignment
• 40:47 — Resilience, striving, and the refugee mindset
• 46:14 — Reskilling, disruption, and adapting to change
• 51:50 — Adopting what works: continuous improvement in economic systems
• 52:38 — The call to action: everyone’s role in the impact revolution

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Conclusion & Call to Action

Sir Ronald Cohen and Tom Bilyeu present a powerful case for shifting capitalism toward a triple bottom line of risk, return, and measurable impact. They challenge listeners—investors, consumers, workers, policymakers—to actively participate in this next revolution for both self-interest and collective good. All proceeds of Sir Ronald’s book go to impact charities, further emphasizing his commitment to the cause.

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Where to Connect:

• Book: “Impact” by Sir Ronald Cohen (all royalties to impact charities; available on Amazon)
• Further Info: Explore the Harvard Business School Impact Weighted Accounts project (HBS IWA) for company-level data on impact.

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"You have each of you a major role to play in this impact revolution." — Sir Ronald Cohen [52:38]

Transcript

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[Tom Bilyeu]

And hey, everybody. Welcome to another episode of Impact Theory. I am joined by somebody today that I think you guys are going to find incredibly interesting. It is Sir Ronald Cohen. Thank you so much for joining me today.

[Sir Ronald Cohen]

Pleasure to be here with you, Tom. All right.

[Tom Bilyeu]

I am super excited to talk about your book, Impact, and I think so obviously with the title Impact Theory, people know I am obsessed with impact and what we can do in our own lives and at grand scale. You're coming at this as somebody who has built an incredibly successful investment firm. If you would walk people through exactly what impact investing is and what you see as the future of this movement.

[Sir Ronald Cohen]

Well, Tom, we're all aware of risk when we make decisions. We're all aware of the return that we get when we make an investment. But to date, we've left Impact out of the picture, and things are changing. We see young people in particular, like those joining us today, refusing to buy the products of companies whose values they don't share because they disagree with using child labor or they don't like the pollution they're creating. They also don't want to work for these companies. And this has become noticed by investors. So today, for the first time in history, we see massive sums, $40 trillion being invested on the basis of risk, return and impact. So what impact is about is improving lives and the planet. And what impact investment is about is generating profit as well as impact. And it's basically changing the world. We've had a technology revolution. All of us are aware of that. This technology revolution is being followed by an impact revolution now where companies just making money isn't good enough. They've got to make money and they've got to make a contribution to solving some of our problems. Big challenges. Improving lives, improving quality of opportunity. Reducing racial discrimination. Increasing diversity. Reducing environmental damage. And I'm glad to say that technology enables us today to measure the impacts of companies. We can measure the products they have and the impact that they create. We can measure what impacts they create through their employment and their operations. Their operations influence people and planet. And so we begin to have a different type of economic system, creating a much better world than the one we've become accustomed to.

[Tom Bilyeu]

All right, I think there's two key pieces that make your story incredibly interesting, and those are you as a refugee. I think people getting a little bit of background on that would be incredibly powerful. And then the other part is how you came to this impact investing, specifically when the government, the UK government reached out to you. I think those two pieces will help contextualize you.

[Sir Ronald Cohen]

Well, I consider I've been very lucky in my life, but it didn't always look that way. At the age of 11, my family and I were kicked out of Egypt because some of you will know of the Suez crisis, where Israel, Britain and France tried to take back the Suez Canal, which the Egyptian leader Nasser nationalized. And as a result of that, I found myself at the age of 11 with my parents and my younger brother, leaving with 10 Egyptian pounds in our pockets and a suitcase each and clutching, as I mentioned in my book, my staff collection under my arm. But it turned out to be a blessing in disguise. We ended up in Britain because my mother had a Jewish passport as well as an Egyptian one. We were welcomed in Britain. I went to state schools. My education was paid for at Oxford. I got a scholarship called the Henry Fellowship to go to Harvard Business School. And when I arrived at Harvard Business School, I discovered venture capital, which was just beginning. This was the end of the 60s. And I sensed that this idea of young people creating new companies that can innovate better than big ones was really the right idea. And I thought, wow, this is going to be big. And I had an obligation to bring back something of value under the terms of my scholarship to the uk And I brought back venture capital.

[Tom Bilyeu]

Okay, so you make a. I heard a joke that you made in one of your interviews where you were saying, you know, this was a time where there was a kid. I think it was an older kid, somebody in college that was saying, oh, my dad is an adventure capitalist. And you were like, nobody knew what this was. One thing that I took away from your book, which I found really interesting, is the sense that some of these things are pretty new. And so you've got, in 1929, you have this sense of like, hey, we have a problem here. We've got no general recognized accounting practices. So even that is in the last 100 years, in the last 50 years, you've got the idea of risk. So walk people through some of this stuff and then if you can, sort of end with what venture capital is so that people understand how these things work, okay?

[Sir Ronald Cohen]

So venture capital is about putting money behind people, usually young people who want to create huge businesses. And they have a good idea of how they can do it and they can recruit a team to do it. And so by putting money behind them, you give yourself the opportunity to make a great gain if they become successful and they IPO or sell out. At the beginning, people thought it was very risky. Like when I started out, it was so difficult to raise money for this. It took us years. But then, as you saw the Bill Gates and the Steve Jobses and others who were dropouts from university built companies and became bigger than the established leaders like IBM, the idea caught on. And today it's a trillion dollar pool. It funded the tech revolution. Basically. What I didn't realize, which I think is what you're getting at, Tom, what I didn't realize is that I happen to be at business school in the US at the time of the birth of venture capital. And something else very important, which was people were beginning to measure risk. Now everybody invested with risk in mind, as we were saying, but nobody had ever measured it. When you began to measure it, people began to realize, hey, this new game, venture capital may be riskier, but it makes more money than it brings risk, so it's worth investing in. So you began to see venture capital and then private equity and then hedge funds become very important parts of portfolios today. Taken together, these three different ways of investing probably account for a quarter of a sophisticated institutions or families, wealthy families portfolio. So venture capital came because we could measure risk. Now what's happening is we're beginning to measure impact, and impact investment is coming because we can measure impact. And as you were saying, in the 30s, after the great crash of 1929, when the stock market collapsed, the US introduced generally accepted accounting principles. So every company had to report its profits in the same way, which until then they didn't have to do. And the use of auditors who basically said these figures are right, they had a legal obligation going with making that statement. Now that gave transparency on the profit of companies. And today I believe we're on the threshold of getting transparency on the impact of companies. So we can look at the profit and the impact and we can have an accurate view of what this company is actually achieving. Because making money at the expense of the environment or poor people isn't the way to do business. And it doesn't help solve the social and the environmental issues we face.

[Tom Bilyeu]

So the reason I bring that up is I really want people watching this to understand that these systems are created by people and they are not immutable, that changes happen with frequency. And when somebody has an insight, because you've talked about the people at, I think it was Chicago University had the insight around risk and it was an insight. And the new insight that you're bringing forward is, hey, you can actually measure some of the things that the companies do that have a knock on effect. We'll call that impact. So whether it's deforestation, whether it's pollutants, whether it's, you know, like you said, child labor, whatever, like you can actually start looking at this stuff, measuring it. And that key insight gives you the tool with which to change the system and begin to shape it. Because I am so worried that people just get terrified that these systems are so big that they can't do anything.

[Sir Ronald Cohen]

Yeah, you're right. You're right.

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[Sir Ronald Cohen]

And we wouldn't have been able to talk in these terms about measuring impact 10 years ago, Tom. Big data and computing power enable us to do this. Previously, we couldn't have done it. It's the first time humankind can begin to measure what a company does to people and the planet as well as the profits that they lose.

[Tom Bilyeu]

Yeah. The timing of everything and understanding what the underlying insights are I think will help people see how they can plug into the system. So one thing that I want to talk about is so as people are looking at the companies that they want to support, they're looking at the companies that they want to work for or whatever the case may be. What are the elements that you think people should be paying attention to?

[Sir Ronald Cohen]

So you should be paying attention to the products of the company. Is this a product you're comfortable consuming? Does it do more harm than good for that company to produce it? Soon you'll be able to hold up your phone to the barcode of the product you want to buy and you will see the environmental and people impact of that product and of the company that makes it. The second thing is its employment practices. If today it's a great company with a great product, but it doesn't have enough Diversity doesn't pay the same amount for men and women. People of color don't advance in the same way through the organization, despite the fact that they have the skills, then it's your obligation to change it. And finally, if its operations are creating huge pollution, if it has a huge fleet of lorries running on petrol, then get the company to shift to electric vehicles. These changes are happening all over the world now. There are examples of very successful companies doing just that. And convince your company that doing good and doing well is in its best interest. If it wants to make more money, the best thing it can do is to do good and do well, because it will attract talent like you, consumers and investors, and it will avoid getting taxed and regulated. And young people get this. Older people have got used to the old system and begin to find a million reasons, often not all of them, a million reasons why this isn't going to work. But with 40 trillion going in this direction in ESG investing, we with a trillion as much as the whole venture capital pool in the world of impact investment proper, where you measure the impact as well already in existence, that is the future.

[Tom Bilyeu]

Okay, so if I am putting myself in the shoes of somebody watching this who may be inclined towards cynicism, I think, well, why aren't we just taxing the rich? Just redistribute the wealth, tax the rich. Get them like a 90% tax bracket, they'll still have plenty of money. Why aren't we suggesting that?

[Sir Ronald Cohen]

So I'm not saying that you don't need to tax those who are better off. Governments need to redistribute wealth and income. Each country picks the extent to which it's comfortable doing that. What I am saying, Tom, is that won't solve the problems because it's not big enough. However much government stacks, it's a tiny proportion of what companies produce through their products and through their employment and through their operations. It's tiny. So however much distribution you take care of, you're not going to solve these issues. But if companies begin to compete with one another on the basis of diversity, of equal pay, of low carbon emissions, then investors bring that change about for you. Because the money would go to the companies that are doing a better job of delivering profit and impact. And those that are left behind, like ExxonMobil, for example, will see their share price fall by two thirds in the space of three years because they're doubling down on fossil fuels, which investors think is a crazy thing to do. Now, you look at ExxonMobil, it creates $39 billion of damage a year from its operation stock. Compare it with BP 13 billion, Shell 23 billion. As an investor, are you wise investing in ExxonMobil? It could get taxed and regulated. It may not attract the talent anymore and its customers may leave it. No. So you go to those who are doing a better job. And I think just bringing this transparency, which I view as a human right, transparency of the good and the harm that companies do is a human right for everyone who's an employee, for everyone who's a consumer, and for everyone who's an investor.

[Tom Bilyeu]

Okay, so now I want to go back to how you got into this in the beginning. So as I'm not a born entrepreneur, so I had to learn about business. I had to learn sort of how to view a problem through an entrepreneurial lens. And when I heard that the UK government reached out to you and said, hey, look, we've really tried to address poverty, but it's proven to be a more pernicious problem than we could have imagined. And so help us look at this from an entrepreneurial lens. I want to know why is poverty so pernicious and what is an entrepreneurial lens and how does that help?

[Sir Ronald Cohen]

So the first thing I realized when I began to look at poverty and everything it causes is we have governments and we have philanthropists dealing with the issue. Businesses are out of it, investors are out of it. I was involved in, luckily for me, being there at the birth of the venture capital industry and contributing to its development. It was a new way of funding people who want to make money. And I said to myself, how can it be that we can't be imaginative enough to find new ways of funding those who want to improve people's lives? Right. So far I'm sure you agree with me. It's a good question. So then I said, if you look at the way philanthropists work, they've led to a system where all the charitable organizations they're funding are small and have no money. Is that sign of a system that works? No. So I said this thing of just giving money away just doesn't achieve the results. The sums aren't big enough either. There's one and a half trillion pool of philanthropic money in the world and you've got 200 trillion of investable assets. So then the question was, how do we bring investment to those who want to do good? And 10 years later, after that call I received from the government in 2000, a team of young people, 30 year olds, and I developed the Social Impact Bonds where Basically we said you can have an investment where your return depends on reducing number of prisoners going into prison, reducing number of kids who drop out of school, increasing number of people who are off the street and into jobs, etc. Now at that time, I thought we found a new tool to help philanthropists because they can now attract investment money on top of the grants they make. But then with the passage of time since 2010, I realized the social impact bond really optimizes. It tries to give the best balance of risk, return and impact, and that's the direction the world's going in. So what looked like an instrument that was clever to achieve a more modest objective now signposted the way forward to what our economists could do. Imagine if every company and its investors tried to optimize risk return and positive impact rather than just risk return. Imagine the change that this would create in pollution alone. I'll give you a number just to focus the attention. At Harvard, at Harvard Business School, I'd share a neffort to turn these numbers we're talking about pollution, lack of diversity into dollars and include them in the accounts of companies, which is what's going to happen. We put out the figures for 1800 companies and all of you can go to HBS, IWA, look up the data set. You'll see 1800 companies from across the world with their numbers. They tend to be big companies because they make this information available under pressure, usually from their shareholders or their boards or their customers. If I say to you, Tom, that 250 of these companies create more damage than they make profit in a year, doesn't the light bulb go on in your mind? And I say to you, a third of them, 600 companies, create damage environmentally from their operations alone, not from, you know, their product or their employment equivalent to a quarter or more of their profit. And together the 1800 create $3 trillion of damage a year environmentally. You know, what does that do to you? Doesn't it immediately give you a sense of wow? By measuring, I can really begin to understand the scale of the problem and who's creating it and who's able to solve it.

[Tom Bilyeu]

So I want to put a pin in this for people. So you are very aware that what you measure is going to become a huge part of this. You're very aware that it can create perverse incentives and people have to pay attention to that. The reason I'm not steering the conversation into that is I think the, hey, we're going to iterate on this over time. It's just a question of can we agree that there is a metric that we should be slotting in here for impact. And so that makes a lot of sense to me. Now I want to explain something fundamental to people because this, believe it or not, for me, like, I learned this really late in life and it might be useful for people. So investing is basically, hey, we have all these people that have made money. Inflation is a thing. So if you put your money in cash over time, your buying power goes down. So people want to invest that money to make a return bigger than inflation so that they're getting wealthier over time and not less wealthy. Your parents are doing this with their 401k. You know, it's not just the ultra wealthy that are doing this. So now the sib, the social investment bond, you've got something where the government participates, says we take this money in tax, and now we're going to pay for performance, which I think is so brilliant. So, hey, less recidivism in the prison system, for instance. So, dear investor, I'll give you, call it 3% back on your money. So if inflation is 2%, I'm going to give you 3%. So a little more. So now you can put money in and actually get a return that's making you more wealthy for making the world a better place. And I bring all of this up in the context of, I think it's Milton Friedman who talked about the invisible hand of the market and that notion that buyers are real people with hopes and dreams, things that matter to them, and that as an investor, what we're trying to create here is a way for people to get a return on their capital that actually moves the world forward. So just I want to anchor people on that so they know you're not blind to the potential challenges, but that they really understand sort of where this is going. Okay, now I want to talk about capitalism. Are you a proponent of capitalism? It's getting a real ugly name these days.

[Sir Ronald Cohen]

I think capitalism means using markets and capital to deliver growth and profit in the economy. I'm in favor of that. I, I don't think communism is better. I don't think very prevalent, deep socialism is better. So it's two cheers for capitalism rather than three cheers. But we can't let capitalism be driven by profit only. We must have markets trying to achieve profit and something good for society or the environment. Otherwise, capitalism creates problems at such massive scale that even governments can't cope with them, which is what's happening with our climate challenges and what's happening with black Lives matter, right? So I believe, as I say in the book, that if we bring impact to the center of our economies, by measuring it, we begin to change the behavior of, of the actors in capitalism who are primarily all of us as employees and then all the companies we work for and all the investment organizations and investors that are funding them. So I'm in favor of harnessing capitalism to achieve risk return and positive impact. And I actually think tomorrow it's the only way, the only way to cope with the huge social and environmental challenges we face. Governments can't do it. Companies have to do it, and companies won't do it voluntarily. All of them, very few of them, a hundred, maybe one hundred twenty, have actually embarked on trying to measure their impact. It looks to them like some new idea that is going to make their lives even more difficult. But investors want it. And when half of all professionally managed money says to companies, hey guys, you've got to start worrying about your impact. We want to know why you're causing so much deforestation. And 2/3 of US shareholders vote against the management because. Because of what you're doing through use of bombardment. When that begins to happen, companies pay notice. And I think most company leaders would rather do good and do well than create problems and make money. But it's the power of consumers and employees and investors together that are going to get them to change their, their behavior. Now you say, well, okay, so you don't need government. That's your next question. I could feel it. You do need government. Because if government doesn't say, hey, every company's got to report on its impact in the same way, just as we do with your financial numbers, then every company will pick its own numbers and you'll never be able to compare accurately. And investors will make wrong decisions because they don't have the right information. Fortunately, I think we're going in the direction of everyone recognizing that we do need to have standardized measurement of impact and that it needs to be to go beyond paragraphs of words, it needs to go to numbers. Numbers that you can compare to the profit you're making.

[Tom Bilyeu]

That all makes sense to me.

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[Tom Bilyeu]

I want to go back to something that you said about communism isn't going to do it. Deep socialism isn't going to do it. Why not? I want to get to the physics of this. Like, what is it? So this is the Part of the reason I brought up Milton Friedman is you have this notion of, hey guys, humans are a certain way, and while wildly complicated and oftentimes irrational, there are certain things that you can predict in their behavior. To me, communism and socialism break down because of a fundamental misunderstanding of what motivates humans and how humans begin to game the system. What's your take on specifically why those things aren't the solution?

[Sir Ronald Cohen]

So we've seen in Russia and in other places that communism, meaning by that that the state owns all of the production resources of a country where everybody is paid more or less the same salary and so on and so forth, achieves much lower levels of economic growth and prosperity than companies that are driven by the profit motive. I think because of what you said, because of human motivation, because if you plan everything for people, you kill innovation and entrepreneurship, the ability to think out of the box, the freedom to try to execute it, and investors are better judges of what's going to work than governments are, and entrepreneurs are better judges of what's going to work than governments are. So what I have found is that if you're going to reduce the prosperity that you're creating, you won't help as many people. What you have to achieve is that increase in prosperity being spread much more widely than it has been to date. And as we were saying earlier, you can do that by redistribution through tax of income and wealth. And we need redistribution of income and wealth. Different countries will give you different proportions, but there are very few countries where people say you should have no redistribution of income and wealth if you happen to have got lucky as I have done and benefited from a great education at the expense of the state. And you've made a lot of money. You should pay more tax. It's fair that I should pay more tax. It's fair. I was given a hand up. I want to give other people a hand up too. But if you tax people so much, and we've seen it in the US and we've seen it in the UK and elsewhere, that you take away the incentive to innovate and to put in a lot of hard work and effort to try to build a company up, we all end up being worse off or less better off. Okay? So I believe that just as we've evolved as human beings from apes, our system, our economic system evolves to. Up until a few decades ago, we seem to be able to cope with the consequences of capitalism. We didn't have the climate change problems we have today. We didn't have the inequality beginning to create rebellion and violence and dysfunction within our society and political systems. We seem to be able to cope, but now we no longer can. The scale is so great, the floods and the droughts and the fires are so great that they threaten the existence of the planet. So hey, we got to get going on being wise and creating a system which is capable of taking these consequences into account. Now, the key to all of this is that risk, return and impact will actually deliver, in my view, in my humble opinion, better growth and profits. Now that may sound counterintuitive because we think of impact and we think philanthropy very often. But if you look at the changing values that are happening today, people not wanting to buy products, work for companies, invest in them, and so on, so forth, if they're creating harm and wanting to go to those that are doing good, that's changed the rules of the game. And if you add to that the huge leaps in technology that can improve people's lives on the planet, artificial intelligence, machine learning, augmented reality, the human genome and the life sciences, we've never been, humanity has never been in a position to deliver impact more widely and more deeply. And finally, if technology enables us today to measure the impacts of companies, then those three things together are changing our system. It's reflected in the trillion of impact investment, the 40 trillion of ESG, the millennials and Z gen who don't want to buy products or work for companies and so on and so forth. So we are at a turning point in terms of our economic system.

[Tom Bilyeu]

One thing that I want to sort of define for people that I think your work in the book Impact does is is take this philanthropy. So my beef with philanthropy has always been it is not a self sustaining economic engine. So for anybody that's ever looked at a philanthropic organization, they are constantly going to people who have figured out a self sustaining economic engine and begging for money. And you talk about that in the book, you talked about it here, that you're keeping these organizations really small. They cannot take risks. And so it's sort of a terrible model all over. And the thing about capitalism that works is that I don't mean this in a negative way, but I've always said you want to align selfish desires. So I'm trying to align my selfish desire for what I'm trying to do in my life with my employees selfish desires with my customers selfish desires. So I don't need them to be any more altruistic than their selfishness will lead them to be and find a way for this to perpetuate. And that's what I see is happening in what you're pushing for in this movement now. I think one of the things that you're going to be up against or we're going to be up against is this is the core of my existence, is there, there is pushback in the sense of communism and socialism sound a lot better than capitalism. So the fact that they have such good PR is. It's very difficult. So I want to contextualize this. You were a refugee, you had to start over from scratch. It's not so hard to believe an 11 year old doing that. I want to talk about your dad, who's 42, 43 something, when this is happening. What was he saying to you? When was he like, this is unfair, it shouldn't be. Was he, hey, we're gonna get a new skill set. Like, what was he saying?

[Sir Ronald Cohen]

You know, my dad never complained. He told me once when I was a little bit older, probably when I was 18 or something, that he'd walked up and down the streets of London wondering what he should do. But he didn't think of employing himself, finding employment. He wanted to create a business of his own, which he eventually did with my uncle, who was a textile engineer. And the advice he always gave me is, don't work for others. You go out and do your own thing. And when it was stuff and there were partners who didn't believe we'd be successful, who left, he said to me, you just persevere, you know, you'll get that. My mom was equally important. My mom presented everything as a positive challenge, a positive opportunity. She baked a Chocolate cake. The minute we arrived in the uk, for us to feel that life hadn't, you know, hadn't changed, I mean, you know, she told me that why she did it subsequently. She was very courageous about it. And she too, never complained. I mean, I guess you. You would say she was really a fighter. And what she drummed into me and my brother and so did my dad. But she in particular is. Education is the only possession that can't be taken away from you. So having lost everything in Egypt, you can understand that I applied myself to getting a decent education. Now, when you talk in terms of communism and socialism and so on, sure, my dad could have ended up working for a company owned by the state. And, you know, he would, you know, he maybe wouldn't have done worse financially in the end because his venture wasn't a great success, but he had this urge to go there, create a company, do the best for his kids, encouraged me and my brothers to do the same. And I think that's a more natural instinct, funnily enough, than the instinct to form everybody into organizations that keep them equal. Human nature is about striving, striving for survival, striving for success, all about striving. And our system encourages and enables striving. The problem, as we were saying earlier, is that this striving has been purely material up till now, with few exceptions. Obviously, you had the Quakers and you had other business leaders who cared about the way they made money and cared about the welfare of their workforce. They're always worse out. But it's only when you begin to think, why should it be striving for money alone? Why shouldn't be striving for money and improvement in people's lives on the planet? And you realize that, wow, that's where the world's going. That's what the majority of us want. And that's what investors are showing that we want and, you know, and they want. And so it's changing whether we're in favor of it or not. It's changing the role of companies for the better.

[Tom Bilyeu]

I love that you have introduced this idea of striving. I think that the recognition that sort of the human brain is wired to incentivize striving, right? To go out, to hunt, to survive, to fight, to live. And recognizing that is whatever structure we put in place is going to need to take that into consideration. And when I think about the pandemic that we're living through now and coming out of that and how it's changed the way that people do business companies have scaled back and realized, whoa, we can actually do this. They're going to want to hold on to that. So now you're going to have a lot of people that are displaced. Now here's where when I was saying that communism has good pr, so there's a sense of just, it's unfair, it shouldn't have happened to me, somebody should be looking out for me and losing sight of that. Humans want to strive, I think exacerbates this problem. There's a whole meme around learn to code. I don't know if you've heard about that, but it's people's reaction to say, hey, you have to reskill. And when I first heard that, I could not fathom that people were reacting negatively to the idea of reskilling. So how do you help people? Look at like your dad did, the need to recontextualize yourself and not come with your hand out asking for somebody to take care of you.

[Sir Ronald Cohen]

Yeah, you know, we've gone through periods in history where whole industries have been made completely redundant. So just one example, the arrival of the motor car killed the horse and carriage industry. Right. You could no longer sell horsewhips or carriages. And human progress involves this type of disruption, as we call it today. The thing is, it's happening now much faster and much more frequently within a person's life. So we have to build ourselves into people who are constantly sensitive to where the opportunities are and how they can put themselves in a position to take advantage of them. So in the old days, if you were a coal miner, coal mines had been there for 100 years. The coal mines closed. Where were you going to find a job? Today I think we say to ourselves, look, technology is changing things so fast. Take retailing. Retailing has been transformed now by the Internet. Where are the people who used to work in shops going to find jobs in the future? What skills can they have? Are we going to keep moving towards a service economy where basically machines help us to increase wealth all the time, we can all share in it and we look after each other? After all, we have bigger aging populations. People are living longer, they have needs in terms of health and so on and so forth? So we begin to think of reskilling as part of our system. It's not unnatural that you should have several careers in a lifetime. And so you begin to see the tools of impact investment now creating career impact bond that teach young people who don't know how to code to code and to get into jobs where their coding skills Enable them to make more money. I can give you an example from Israel where I sit as we talk today, where you have young girls who were top of their class living in villages in the Druze community, which is a bridge branch of Islam, and they can't go outside of the village for religious reasons. Well, we've created locations for them to work for tech companies remotely. About 60 of them will have been trained and got into jobs where they make four to five times the monthly salary they made when they worked as cashiers in the supermarket. These young women are becoming the bread owners of their families. You know, so of course here you're talking younger people, but it could apply to a 50 year old. There are lots of skills that, you know, that people can learn. And so we have to think imaginatively. If we see the fossil fuel industry going down and we see clean energy going up, we have to say, well, how do we reskill people so that they can find jobs in clean energy? What are those jobs going to involve? You know, is it going to be in solar farms that are generating electricity, battery manufacturers to store, you know, that, that electricity, Is it going to be other forms of electricity generation that, you know, we're going to go towards? What are going to be the ways of remedying, you know, fossil fuels? And similarly with the water. Water is crucial to the development of the world. We can't just develop developed economies and forget about emerging countries. You see what's been happening with refugees trying to get into Europe from Africa in search of a better life and in the US from Mexico. We have to find solutions for them too. Those solutions will involve education of these populations which companies in the developed west can create products for. As I was saying earlier, the ability to use technology to provide remote health, remote education and so many other things remotely is greater than it's ever been. And so I think, Tom, when you think in terms of a system that can cope better with these challenges which come from human ingenuity and innovation, a system like capitalism, which is dynamic and resilient and reactive, if it is channeled in the same way, will be better than a system where the government tries to plan everything from above. But we can wait and see. If we find communist systems that work in the future and do a better job of it, then we have time to look at their methods and adopt them.

[Tom Bilyeu]

That is the perfect place to end. I love that you put a button on it of what I'll call the entrepreneurial spirit of what works, what actually works. All we care about is what works so, so once we agree on what we're trying to achieve, then it is merely what is the most effective path to get there. Sir Ronald Cohen, thank you so much for joining me today. Where can people connect with you? Where can they get the book? Which you should tell people that all the proceeds are being donated. I think that's important.

[Sir Ronald Cohen]

That's correct. To impact charities. You can all get the book on Amazon. The ebook is only a couple of bucks so that everybody can afford afford it. The hardback is also inexpensive. The paperback will be coming out in the United States in a month or so. All of the profits are going to all the royalties are going to impact charities. Spread the word about explains how all these pieces fit together. And you have each of you a major role to play in this impact revolution as consumers, as employers, as investors, as government officials. So let's all do everything we can to bring this revolution about. The fates of billions of people and the future of our planet depend on it. I love it.

[Tom Bilyeu]

All right, guys, speaking of things that will influence the future, if you haven't already, be sure to subscribe, subscribe. And until next time, my friends, be legendary. Take care.

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[Tom Bilyeu]

Here from Mint Mobile.

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