Embracing the Challenge of Transparency with Daniela Barone Soares

Episode 14 - Embracing the Challenge of Transparency with Daniela Soares

Servane: [00:00:00] Welcome to Be and Think in the House of Trust, the podcast for people who love to invest in social change. My name is Servane Mouazan, and in this series we talk about trust, collaboration, impact investors, professional transitions and mindsets, empathy, allyship, cultural differences, how to grow trusted relationships between investors and I investees, but what it means to take risks.

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: Today, I'm pleased to welcome Daniella Barone Soares in the House of Trust, Daniela. [00:01:00] Ji? Yeah. All the way from Brazil. Fantastic. Okay. I live in London though. I'm just in Brazil now. . Right. So youre currently c e o of Snowball Impact Management Limited in the uk, and you were before that c e o of Financial Advisory and Strategic Consultancy Granito.

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: Where'd you find all the. From, uh, trying to sort of do something good for the world, I guess, you know, I love innovation. I think sort of even now at Snowball. I work at finance with financial services, but I, I would say that I'm [00:02:00] a curious humanist in a way rather than an investor, you know, per se. So I am very curious about business.

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: Hmm. I love that. Curious humanist. And then, so I, I love your, your quotes every time. So we go back a long time ago when, when, when I was, uh, leading, uh, leading and, and working with women in social enterprises. I remember, um, you kindly joined us at one of our events and you gave, uh, a talk and that still [00:03:00] resonates with some people who were there and I still see today.

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.

Daniela If you wanna change something, you need to really go at it and you will change [00:04:00] several times. And so I think the discipline to learn to understand. To define processes, to document them to, to test. That is almost like, you know, like any scientific breakthrough doesn't happen without a ton of trial error, but with a lot of discipline.

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 Let's put it this way, it's interesting. I mean, that's such an interesting question. You know, I think for a long time, Investors have understood the risk of, for [00:05:00] example, inflation eroding purchase power, you know, and, and how you can lose capital by, by poor investment decisions. I think sort of, you know, and that has led to a creation of a whole way of investing.

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 the E S G kind of, you know, started to take some shape. And I know there's a controversy around E S G, but E S G is simply a risk management [00:06:00] tool that allows a company and an investor to understand what are the risks. To that company's cash flow. Futures cash flow from environmental, social, and governance elements.

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: It it, it's natural disasters. It's humanitarian disasters. And what we do at Snowball is invest in companies that are taking this into account. So the companies that are providing solutions for the social and environmental issues that we face, which we think are the companies of the future. So these companies should be the ones that will generate better financial returns because they understand not just the [00:08:00] risks of the outside world into the company's cash flows, but they also recognize that.

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.

Daniela And I think all, all of us at Snowball believe in that. And we're looking at the companies that are doing that and we're backing them because we think these are the ones that will, that will survive. That will. And that will provide, you know, both a positive impact in the world, but also a positive impact in [00:09:00] everybody's pockets as investors.

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 Yeah, I see, I see. I think as any, you know, I, I, um, I'll give you an example, uh, to talk, to, talk about this in finance, but I was, I was, I used to sit at the board of a fantastic company called Helma. It's a Fusi 100 company, and they decided that they wanted to disrupt their [00:10:00] own business.

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?

Daniela We actually don't disrupt the bigger system, so let's just change enough so the real change doesn't need to. I love [00:11:00] this. Apologies about waking up the antibodies because they're gonna create a fuck. So, and that takes in, in, in internally personally, do you think that, God, that sounds like a bad journalistic question.

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: It's almost like the system doesn't allow it, and I don't mean the system like some oppress or big brother. That's not the how I'm talking about it. I'm talking about. The way that we've we're used to live, the way that one thing fits onto another, so that they just reinforce each other. So [00:12:00] if you're trying to do something, even if something better, it will face that kind of resistance of like, oh, I have to, even if you're trying to go to work and you walk to work and you want to walk through a different route, it will face a little resistance in your brain that you.

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 Now you're empowered to deal with it. And what it says is, uh, stress is a form of pain that tells me there is something I need to change, which means that, you know, I. The system is [00:14:00] creating stress in us on a daily basis. Most people, I fully believe most people are good. Most people would love to invest with their values.

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?

Daniela And of course I'm not, you know, being poll, nor I am. Shifting the responsibility to the individual to change the bigger system. The financial industry has a responsibility itself, and it's not for the investor alone to try and raise the flag, but equally, I don't want to say that we're also [00:15:00] powerless. You know that we absolutely, Absolut.

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: You've called in an independent agency to verify your, your organization's impact claims. Where you lead the market in integrating positive returns with positive change and where you [00:16:00] need to improve. And then you published the report and I could see people can't see it, but I can see your face lighting up some excitement still.

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: And then we said, well, what about our impact? We need to, you know, we need to know, but we can't. [00:17:00] Talk about it ourselves. We need to bring someone reputable and good. And we put a tender out and, and, uh, the good economy won the tender to, to do this independent verification. And we're not the first one to do a verification, but we, as far as we know, we are the first one to fully publish it.

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: You know, in a way for us, in terms of the risk and the transparency that you, that you ask about is this thing that, wait a minute, we, we have people's money. And when we have people's money, I [00:18:00] think the industry, largely the mindset, so this, this for us is a little bit of shift in mindset as well, because the industry often thinks, and mostly things.

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?

Daniela: You're putting your head above the parapet and, and it's always a risk because even though we feel that we're doing. Well, you know, as well as we can and we, we try to drive that integrity in everything that we do. And, and you know of, of course sort of, this is not the thing of this conversation, but the sort of, it is driven throughout the whole organization, how we run ourselves, the fees we charge, the governor, structure, [00:19:00] everything snowballs.

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.

S Daniela: And even, you know, our first impact reports, and this is the interesting thing as well, because our methodology was very pioneering, is it's still, I would [00:20:00] say quite. Of the curve and ahead of many in the industry, and what did we do with this amazing proprietary methodology? We shared it publicly from the beginning.

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: 1% of the, all the global trillions of money being managed today, only 1% is going towards impact practices, investing in this way. Right. It's shameful. It's a real shame. So, you know, there is room for everyone. Let's just share so we can [00:21:00] accelerate how the whole ecosystem grows. Because what we need to do is not to have our own little proprietary, you know, um, Methodologies that nobody can understand, like a black box.

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?

Servane: Which were your thoughts, ? [00:22:00]

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: You know, we do hope that that more people will, will take that stance because yes, we don't have it all. Together. You know, uh, it's not all perfect, but it is how we learn. And I think, you know, I think actually one good thing that I think is already changing in society, so we talk about, you know, things that are hard to change, but I think one thing that has changed already actually is that I think people read a report where everything is perfect and they immediately say, I don't.[00:23:00]

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 Nice, open visionary. Yeah, and I think, I mean, you know, organizations like Snowball, to be honest, we're very lucky because we're not, we're built already in a different way, so we kind of don't have, I'm [00:24:00] sure that at some point those antibodies will develop, but we were already built to change. Uh, but you know, most companies or, or, or industries are not like that.

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: We need to kind of create something that. Genuinely new. Not just the old with a little bit more rest on it, you know, not just the old with a new chocolate sauce on top. You know, it's, it's kinda, you need to kinda do, um, you know, to really reinvent, recreate [00:25:00] reexport. And I think for. Companies that have strong antibodies, you know what I would say?

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.

Daniela Was thank very, such a, I really appreciated, I really appreciated your, your, your passion. A couple with discipline, curiosity and, and, uh, and goodness. People can't see, but you're, you are dancing on the screen when you are, when you express [00:26:00] yourself, it's.

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: Next time, I will collect and share with you all the questions that our guests have asked themselves and asked you to your audience, [00:27:00] take it as a lovely opportunity to pause and think independently for yourself and as yourself, as you ignite more positive social and environmental impact. If you enjoyed the first series of this podcast, share it with your peers and friends.

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!