Sonen Capital’s CEO leads the way on the new frontier of impact investment
“First and foremost, we are investors,” says Robert Goldstein ’90. But the potential for generating profits isn’t the only thing that Goldstein and his firm consider when making investment decisions.
Today, as CEO of the San Francisco–based firm Sonen Capital, Goldstein focuses on delivering investment solutions that achieve positive social and environmental impact as well as competitive market returns. He sees his role as an opportunity to combine his expertise in the law and finance while pursuing his passion to make a positive difference in the world.
“When we consider making an investment,” Goldstein says, “it must be financially viable, and it must have the degree of impact that we’re looking for. We won’t make an investment unless both are present. There also needs to be ‘intentionality’ by the company, clarity that [leaders are] doing this because their intention is to create some social or environmental impact.”
Prior to joining Sonen, Goldstein was CEO and managing director of RCM Capital Management’s San Francisco office. RCM, which has since been rebranded Allianz Global Investors, was a global investment management firm with more than $125 billion in assets under management in both the institutional and retail market. While at RCM, Goldstein chaired the U.S. management committee, and was a member of the global executive committee, the global sales and marketing committee, and the global business management committee. Goldstein has extensive experience in strategic planning, execution, and operations management. Before assuming the role of RCM CEO in 2010, he served as the company’s San Francisco chief operating officer and general counsel.
Previously, Goldstein was an associate in the New York, London, and Prague offices of Weil, Gotshal & Manges, where he focused on mergers and acquisitions, corporate transactions, and investment management matters.
During an event at the Law School last fall, Goldstein spoke about his career with Dean Nick Allard. An edited and condensed excerpt of their conversation follows.
What are some of your recent projects that you’re excited about?
We recently invested in a company that develops hydro, solar, geo-
thermal, and wind farms in sub-Saharan Africa and serves energy-constrained countries. We’ve also been conducting due diligence on livestock farms in Australia. People may or may not realize that about 15 percent of carbon and methane in the atmosphere comes from livestock, so it’s very important to find better ways of raising cattle and providing people with beef in a sustainable way. We’re looking to invest in those kinds of innovative livestock breeders.
How do you measure your firm’s progress?
The easiest way to measure progress in terms of environmental and social impact is by looking at the outputs and outcomes of a particular investment. For example, we would measure the megawatts generated by renewable resources and the amount of fossil fuel energy displaced for a clean energy investment. Or you can look at the number of people who previously didn’t have access to electricity until you brought in a micro-grid fed by a wind or solar farm. Simply said, we can see impact as more people gain access to electricity.
Additionally, we can measure the carbon footprint of some of our portfolios. There is scientific research that now charts the amount of carbon reduction necessary to meet the standards set by the Paris Agreement adopted in 2015. The agreement seeks to prevent global temperatures from rising more than 2 degrees Celsius from pre-industrial times. We can map our portfolio along that line graph.
Why is impact investing good for business?
Renewable energy used to be just for hardcore environmentalists, but, for the most part, solar and wind are at cost parity now with fossil fuel-based energy. We’re seeing a technology revolution that is helping to address climate change in innovative ways. Many companies, especially those that are big users of electricity like Microsoft or Amazon, are looking for more sustainable ways to run their massive data farms. Once they put in renewable energy and buy power purchase agreements that go out 20 or 30 years, they know exactly what their cost of energy is going to be, and they can manage their company more efficiently.
What kinds of investors have an appetite for the products you offer?
Historically, this has been a focus for high-net-worth individuals, family foundations, and similar organizations that align their portfolio with their mission. But for impact investing to really take off, we need to democratize the space. Nine out of the 10 largest money managers in the world now have impact departments, and they’re starting to create products that are accessible for retail clients.
What role has the Law School played in your success?
The Law School taught me to be a critical thinker. I tend to analyze things in a linear way, as opposed to a fragmented approach. And it taught me the importance of clear and concise writing. I think that being able to express yourself in a cohesive, linear, and articulate way is critical for a successful career.
Your career started in Big Law. What was your first job like?
I look back on my first job at Weil, Gotshal & Manges as one of my most important professional experiences. I learned that being successful and making a difference requires the willingness to put in the effort and hours to get the job done. There is no shortage of smart people, but without hard work, it will be difficult to differentiate yourself. One example of this that sticks out in my mind was when I was working on a large merger with another Brooklyn Law School graduate, Dennis Block.
I was just a year or two out of law school and working crazy hours every night. One Friday night, I worked really late. But my phone rang at 6:30 the next morning and, when I answered, I heard this booming voice.
“Where are you?” Dennis asked. He then told me we had work to do and to get back into the office. And when I arrived, feeling half asleep, there was Dennis—full of energy and focus.
What’s your advice to a law student who wants to pursue a career in impact investing?
There are law firms that focus on this work. Morrison & Foerster has a fantastic impact practice based in San Francisco, and we use Arnold & Porter a lot. There also are law firms that work with social entrepreneurs, which is another way to get involved. You might consider foundations and nonprofit organizations, such as the Ford Foundation, which just dedicated a billion dollars to impact investing. The Bill and Melinda Gates Foundation is doing a lot of this work already.
But the reality is, in 10 or 15 years, I hope impact investing won’t be an area of specialization. It will just be the way people invest.