‘Finance for the 99% is not simply a matter of altruism, it is financially sustainable’

In her recently published memoir, The Defiant Optimist: Daring to Fight Global Inequality, Reinvent Finance, and Invest in Women, Durreen Shahnaz takes the readers into the inner workings of financial systems and ways to mould change from within. 

Shahnaz is not only the first Bangladeshi to work at Wall Street in the late 1980s but also the person to launch the world’s first stock exchange for social enterprises at Impact Investment Exchange (IIX), an investment service company based in Singapore. Shahnaz founded it in 2009. 

In the book, Shahnaz takes the readers through Bangladesh, the Philippines, the United States and Singapore and also across industries — banking and finance, social enterprise, academia and even media. But she manages to stay true to her core objective: to bring change in the financial market.     

In an interview with The Business Standard, Shahnaz delves into the driving forces behind her persistence, women empowerment and inclusion through financial instruments, her success and more. 

It’s interesting to read how you tied in the many micro-moments of gender bias at home to larger workplace gender biases (from Wall Street to rural village homes in Bangladesh) – and in doing so, effectively created a comprehensive look at a woman’s life – especially one who dares to break stereotypes. There’s a part early on in the book where you speak up to your grandfather. Can you tell us more about that moment, what made you speak out then?

I am glad you caught the micro and macro juxtaposition of gender bias in the book! Growing up, I was determined not to have the lives of the women I saw around me so I was driven by the desire to break away from it. I often pushed back with my parents and grandparents. Yes, it wasn’t pleasant but I was determined not to be put in a position that I did not want to be in. But, for me pushing back was not just for myself but for the system at large and that manifested in my work later on in life. As for the scene in the book, your readers have to read the book for a greater sense of the context. 

You were the first Bangladeshi working on Wall Street all those years ago. Have there been more ever since? 

I do not have the exact data on this but I know through word of mouth and friends that there have been many more Bangladeshi women in Wall Street after me and that makes me proud. While we have made some progress over the past three decades, we are still far from a truly equitable Wall Street – not to mention the world. We have to go beyond making finance inclusive, and other spheres of life as well. 

This is why at IIX we have also set our sights on painting the world ‘Orange’! Orange is the colour of Sustainable Development Goal 5 for gender equality – for women, girls, and gender minorities. So we are bringing gender equality and climate action together into an Orange Movement – our work with Orange Bonds, creating Orange tagging for financial products in the market and putting out Orange Seals for all businesses to show that they are practising gender equality and climate action through their operations. 

What advice would you give women who want to enter financial markets to bring about change in terms of scaling their expectations?

It is not about scaling expectations but more about strategic action to gain the outcomes we want. As the first Bangladeshi woman on Wall Street, I had to work doubly, if not triply hard, to prove myself in a world dominated by white men from privileged backgrounds.

I am the founder of Impact Investment Exchange (IIX) and the mind behind the Women’s Livelihood Bond (WLB) Series, a successful impact investing company and a very successful financial product but the journey to get here was not easy. 

My gender and race were viewed as a risk. Gender bias – conscious and unconscious – is all around us. But rather than throwing in the towel and railing against the system, my approach was to change it from the inside and figure out how to make the system work for all. It takes resilience, but my work is proof that it can be done. Yes, you have to take a few bullets and you will lose some battles but remember, you are doing what you are doing to win the war for inclusion. 

For the readers, can you explain “The Blended Value Map” and why it’s important to you?

Blended Value is a concept that was coined by Jed Emerson, a social worker turned impact investment advisor. The Blended Value Map is a concept from the book ‘Impact Investing – Transforming How We Make Money While Making a Difference’ co written by Jed Emerson and Antony Bugg-Levine. Traditionally, people have seen economic value as being at odds with social and environmental impact. But the Blended Value Map is a framework that explores how value should be measured in a holistic way that combines (i) social and environmental value impact, and (ii) economic returns. Organisations – whether for-profit or non-profit – should measure their true potential performance by fully taking into account their economic, social and environmental values. 

This is an important concept to us because, at IIX, we have proven that finance for the 99% is not simply a matter of altruism; it is financially sustainable and globally transformative. It is worth noting that with over $300 million out in the market (between Impact Partners and WLB), we have never had a loss. 

We attribute this to our skill of correlating the deep impact that we create and measure through IIX Values (impact measurement tech platform) to lowering the organisation’s operational risk. If you think about it, it is a no-brainer that if you create a deep positive impact in the community, your organisation will be loved and respected by the community. 

For the uninitiated, can you explain what is impact investing market? What is the current global size of this market and is it expected to continue to grow?

In a nutshell, impact investing refers to the strategy of investing with the intention of not just making profits, but also generating positive and measurable impact. It means that you can make a social and environmental difference with your investments. Thus, when you choose to invest your money you would only choose investments that create environmental or social impact. 

Although the concept has been around for decades through various religious groups and cooperative movements, the term impact investing was coined only 15 years ago. I was one of the lucky ones to be a part of the group that coined the term and put it to work. 

Impact investing has been gaining in popularity. According to the Global Impact Investment Network, the size of the worldwide impact investing market is estimated to be $1.164 trillion in 2022 and is poised to grow even more in the coming years. 

However, it is worth noting that we need to be cognizant of measurable and verifiable impacts. Along with impact investing, ESG (Environmental, Social, Governance) is also becoming a buzzword nowadays and it seems that every company is jumping onto the bandwagon. While it is exciting to see the interest, the onus is on us to ensure that this new industry is not simply paying lip service and making superficial actions. 

For the uninitiated, I would strongly recommend that you do your homework and determine which companies are truly making a difference, before jumping into the impact investment market. If you want to measure the impact of your organisation, do check out IIX’s impact measurement platform, IIX Values.

What is your take on Bangladesh’s impact investing market?

It is exciting to see that the impact investing market in Bangladesh is growing. There is definitely interest among investors in the country and outside to invest in companies that are creating positive social and environmental returns. Where some of these investments fall short in the measurement of the impact. We held the first impact investing gathering in Bangladesh back in 2010. It was a huge success with various ecosystem players coming forward to be a part of it. 

So, the interest is there from the ecosystem as there are wonderful companies to invest in. However, it is the regulatory challenges that give the momentum a pause.

In terms of regulations, it would definitely help if the financial market was more open about debt investments because impact investors now are more interested in debt investment than equity as the ‘exit’ for equity investments are few and far between. 

In addition to regulatory changes, the market also needs education about the impact investing sector – how it works, the learnings from it etc. The Bangladesh market needs more education and exposure to what works and doesn’t work in this space. There is a lot of capital to be tapped into and we just need to get the Bangladesh market ready for it. This is an important exercise not only for the country’s sustainable growth but also for maturing the financial markets as the country becomes a middle-income country soon. 

In the book you asked “Why do humans fundamentally fear difference, whether people or ideas?” — have you found the answer to this?

It is human nature to fear what we do not understand. We also make unconscious judgments very quickly. So as mavericks, what we can do is to bridge the gap of knowledge and empathy in any way possible. 

In finance, it meant that I had to enlist men to pitch the Women’s Livelihood Bonds to investors, who would subconsciously be more biased against the idea of such an innovative financial instrument and also the name ‘women’s livelihood.’

So, it is a process to turn people’s biases around. You first go with what is palatable for them then slowly make the change from within. Change doesn’t happen overnight but it does happen. Look at our Women’s Livelihood Bond now, the sixth one is going out in the market now and the market is clamouring for it. It is no longer an issue of who sells the bond. Investors are thrilled to be a part of the ‘cool bond that is changing the world.’

For our readers, can you tell us about the Woman’s Livelihood Bond? Its current status, how can it be accessed, future plans for expansion or more coverage?

IIX’s award-winning Women’s Livelihood Bond™ (WLB™) Series is a series of innovative gender-lens blended financial products that empower women and girls across a multi-country and multi-sector portfolio. The WLB™ Series bonds support 15 of the 17 United Nations Sustainable Development Goals (UN SDGs).

To date, we have mobilised more than $128 million, impacting 1.3 million women and girls across Asia and Africa with five issuances. We will launch the sixth issuance of $100 million in Q4 of 2023. 

With five issuances since 2017, I am proud to say that we have not had a single default – even throughout the Covid-19 pandemic. We have successfully created this new financial instrument that delivers stable returns and sustainable impact to investors. 

Between your work and family, when did you find the time to write and put this book together? Do you maintain journals? What has been your writing process behind The Defiant Optimist? Also, are you planning to publish books in the future?

It took me four years to write The Defiant Optimist. I was very disciplined about writing the book. I had a full-time job running IIX, being a mother to two daughters who are very independent but still needed me, and I have an elderly father in Bangladesh whom I had to take care of remotely and frequently in person. So, like most people of my age, my plate was full.

But even in that hectic schedule, I would carve out an hour or two at night around 11 pm or so to write. I would be yawning but I would still write. 

I would also write on the weekends. I would close myself up in my library, blast David Bowie, REM, and even Ornob, and just write for 6/7 hours in a stretch. The rule in the house was unless someone was dying, nobody could disturb me. I took on writing the book like any other project, I was organised and determined and it got done. It was a lot of work but it was so worth it! I hope to write another book in the future. 

If the reader is to take away one lesson or impression from this book, what would you like it to be?

Anyone can be a defiant optimist. The pursuit of your North Star will be a difficult and sometimes lonely journey, but if you dare to imagine a better world, dreams do come true. My story is proof of that.