[Namsan Ddalggakbari] "You Can't Change the World with Clumsy Charity Work"

If We Can Change the World / Written by Morgan Simon / Translated by Kim Youngkyung, Shin Jiyoon, Choi Nayoung / RH Korea / 15,000 KRW

[Asia Economy Reporter Minwoo Lee] "Clumsy understanding by well-meaning people causes far greater frustration than the malicious misunderstanding of others."

This is a quote from a letter written by the late Reverend Dr. Martin Luther King Jr., who led the nonviolent Black civil rights movement and received the Nobel Peace Prize, while he was in Birmingham Jail in 1963. To Morgan Simon, author of "If We Can Change the World," charity and aid work represent "clumsy goodwill." Although these efforts emerged to correct the side effects of the free market economy, they are merely reactive measures taken after prioritizing profit generation. Ultimately, they conceal the structural problems of the economic system that foster poverty and inequality.

The Limits of Charity Encountered in a Tuna Can

The American-born author devoted himself to volunteering from his teenage years. He believed that social issues such as rampant inequality and poverty could be solved through the nonprofit sector or public policy. However, after working in the charity sector for ten years, this belief was shattered. A decisive moment was the "tuna can" incident he experienced in Sierra Leone as a college student.

In 2003, supported by the UN, the author was tasked with assessing the decade-long civil war situation in Sierra Leone. One day, he witnessed a street vendor selling tuna cans donated by the Japanese government at five times the local meal price. Seeing the vendor profiteering from food meant to be distributed free to locals who could barely afford one meal a day revealed the limitations of aid projects. "American charities donate $46 billion annually, but compared to the $196 trillion circulating daily in the global economy, this is barely a drop in the ocean. Moreover, even that amount fails to provide people with substantial help and sufficient resources."

The Need for 'Impact Investing' to Create a Sustainable Society

Therefore, the author proposes "impact investing" as a more fundamental solution. Impact investing seeks not only financial returns but also social benefits. It is an investment approach that integrates financial management with social and environmental responsibility. Rather than focusing solely on mitigating problems, it aims to improve underlying structures while pursuing profits. However, it does not obsessively maximize returns. It pursues a direction that continuously benefits investors, workers, and local communities. Among the recent buzz around ESG (Environmental, Social, and Governance) investing, it represents the most proactive approach.

The author counters criticism that impact investing yields lower returns compared to traditional investments. "The current financial system, which brings short-term wealth, is unsustainable because resources and cheap labor cannot last forever. Even the most conservative financial institutions acknowledge that this strategy was only viable in the past. The New York City Employees' Retirement System, with assets exceeding $47 billion, includes most core stocks in its portfolio, but if companies do not address social and environmental costs themselves and externalize them, other companies in the portfolio will bear these costs, perpetuating a vicious cycle."

The Miracle of Kakao Farms Creating a Virtuous Cycle

As a success story of impact investing, the author introduced investment in cacao cultivation in Belize, Central America. Although a fair trade system was introduced to the cacao industry at the time, it instead acted as "clumsy goodwill," causing the industry to decline. Price volatility was eliminated and a minimum selling price was set, but even when prices surged, farmers' incomes barely changed, leading to quality issues. In response, chocolate expert Emily Stone established a company called "Maya Mountain Cacao" with local farmers and businesses and launched the brand "Uncommon Cacao." They then focused investment on quality improvement, growing it into Belize's largest cacao export company. Farmers gained more free time and tripled their income.

The author personally traveled to Belize to draft an impact statement that restructured corporate governance, ownership distribution, and benefits. They set the profit margin at no more than 49% and agreed to donate any excess and 10% of annual net profits to a farmers' fund. This fund is invested in technical support for farmers' organizations. This structure balances risks and returns among investors, companies, and local communities, creating a sustainable virtuous cycle.

The Growing Impact Investment Market to Change the World

The global impact investment market has already grown sharply, reaching approximately 800 trillion won as of 2019. Domestic institutional investors such as the National Pension Service, as well as private companies like SK and Kakao, emphasize impact investing through ESG bond issuance. The author also chairs the impact investment firm "Candid Group," managing investments of about $150 billion.

The author's ideals are high. He points out that breaking the chain of exploitation is not the best but a compromise. Being satisfied without achieving fundamental change is intellectual laziness and a lack of responsibility. He urges us to walk the path that surely reaches the destination rather than just finding the fastest route.

This content was produced with the assistance of AI translation services.