Multi-generational mindset is the path to a brighter future and is the key to understanding impact investing. It represents a style of thinking beyond one’s life and thereafter.
Companies perform for the short-term future while planning for the long-term. But long-term planning is difficult by nature given how often and suddenly society and technology change. And this is partially because as a society we don’t think beyond our retirement.
Artificial intelligence is a great example of an unplanned change. It is in its infancy in terms of development. The technology for the hardware is playing catch up to its potential and the uses for it are still confusing and unclear to the general public. However, most investors see a fast-growing industry that can create a profit generation. It is certainly true for the short term and possibly medium term.
However, has anyone really taken a hard look at how it will affect the next generation? As we shift our creativity and struggles of learning to an instant solution creator, would be beneficial to the next generation of humans? The grind of going through multiple different readings online and talking to professionals is being replaced by simply typing the question into a chat box. What is the long-term implication of this?
Capitalism creates chaos and expects that from this chaos, only the profitable and efficient will prevail. This exact same system has allowed the smartphone industry to prosper, and will do the same for the EV manufacturers; some will survive and some will fail. And in the end, we get the best of it.
However, this exact same principle has also brought in climate change and global warming. Untethered competition on who can create more has damaged our ecosystem. What will be the impact of mining for lithium and other minerals that are essential to EV batteries in the long term? How will society adjust to making money when a portion of the brain work has shifted to AI?
Incorporating impact investing into the traditional investment method is a way of inputting multigenerational thinking into Capitalism. As people consider more about the impact of the process and its product, companies will be required to follow the same mindset. And it is okay to be slow and steady.
