An investment banker for 23 years, Vikram Gandhi started thinking about what his legacy was going to be, above and beyond carving out a successful career. With grown children and financial stability, he decided to change direction. When an opportunity to teach at Harvard Business School “accidentally” presented itself, he did not hesitate. He now teaches several courses that use his business acumen and experience as the basis for teaching the younger generation about investing. It’s a move that has taken his life full circle - the former banker at Morgan Stanley and Credit Suisse was once a Harvard graduate himself.

Vikram Ghandi Profile Image_The Investment Banker Turned Teacher_Alexandra Court_Invest for Good blog

Vikram also wanted to leverage his connections and skills to address income inequality and other pressing social issues in India, the country of his birth. Out of this desire, he founded Asha Impact, a for-profit impact investing platform that serves the underserved through investment in some of the most innovative social enterprises being developed. It also produces targeted insights that can be used to inform policymakers wanting to create social impact at scale.

From his home in Boston, Vikram spoke at length on various topics related to his career as an investor. He told Invest for Good why he believes capitalism needs “tweaking”; how he helps to create financial inclusion in India; and why he does have hope for the future, in spite of the global challenges facing us today.

On falling into teaching at Harvard Business School... 

I had been back to Harvard frequently over the years for recruiting and other activities. My visits started increasing when my daughter was at HBS a few years ago. I started talking to the dean and some other senior members of the faculty. There seemed to be quite a bit of need to develop a course around investing for impact — the kind of stuff I was doing in India and when I was in banking as well. And then I thought to myself: “If I can actually be in front of future investors and leaders, discussing impact with them, that would be fantastic.” Well one thing led to another and that’s how I got into teaching.

I developed a new course along with a colleague of mine, Investing — Risk, Return and Impact. It is an investing course that delves into how you incorporate impact into your investing decision-making process, and how companies impact the world around them. I now teach three different courses and I really love it. It is fascinating to be in front of folks who are 25 to 35 and all have a different perspective. I actually learn as much from them as they learn from me, so it is a very enriching experience.

On the growth of impact investing and why we are seeing it now...

With consumers and investors demanding this, more visionary companies are adapting to this new environment. Over the course of the next couple of decades, there is going to be approximately $40 trillion of wealth transferred from my generation to millennials. It is predominantly the younger generation saying they want portfolios where they are not investing in companies that have negative externalities. They want to focus on investments that have a positive impact, and that is where they will put their money. I definitely think this is going to continue to be a focus from a consumer standpoint, a Millennial/Generation Z standpoint, and an investor standpoint.

Aerial of the Harvard Business School Campus_Vikram Gandhi
Aerial image of Harvard Business School Campus
On whether you need to accept below-market returns as an impact investor… 

The normal argument against impact investing is that you are restricting the universe of things you can invest in. Therefore, you must see sacrifices somewhere, right? Well no, there is a lot of work going at HBS and other universities, tracking the data that evidences you do not need to sacrifice financial returns. That is leading some of the private equity firms — for example, KKR and TPG — to launch impact funds and they’re not doing it for sub-par, sub-market returns.

On the importance of risk management… 

Investors are realising that it is not just about doing good, but about risk management. If you invest in fossil fuel companies now and have a 20-year time horizon, your investments may not do well. Over a period of time as the world transitions to renewables, these companies are being valued on the reserves they have. These reserves, however, will not be exploited, so these companies may be overvalued. It’s called the standard assets theory. If you have invested in coal companies, which were at their peak in 2011, it has been one of the worst-performing industries, and a significant number of companies went bankrupt in 2015. If you look at the performance of energy resource companies in the last couple of years, it’s been terrible. If you don’t factor in all these externalities into your investment process, you’re probably making bad investment decisions. 

On whether capitalism needs a serious rethink… 

I’m still very much a capitalist at heart. I want to be clear on that. I think it needs tweaking, though. You can’t have a system that keeps generating income and racial inequality, where not all boats are rising with the tide. There is now this notion of stakeholder focus rather than shareholder focus. It came up for the first time last fall at the Business Roundtable, a group of some of the leading companies in the world. 

Companies are the biggest drivers of economic activity, whether it be a small proprietor or entrepreneur or a large global corporation. Even if shareholder returns and primacy are important, four other stakeholders are equally critical: suppliers, customers, employees, and the community around you. From a business standpoint, you can make the argument that if you don’t focus on these four other constituents, your shareholders are not going to get the return that they could. I think companies now need to think about metrics for all these four other things and to make that very much part of the reporting package for which management is held accountable. This is a slow burn; it is not going to happen overnight.

Asha Impact's Annual Leaders Meeting 2019
Asha Impact's Annual Leaders Meeting 2019
On how much progress the industry has made on metrics… 

We’re in the first or second inning of a baseball game. I think it’s early days, but in the last couple of years we’ve made significant progress. I think it’s happening more and more because investors are demanding it. There is some regulatory impetus to make it happen. Then there’s the Impact Management Project, which, essentially, tries to bring all of these together into a framework. It has done terrific work. We are also working on a project at Harvard Business School which one of my colleagues is leading called the Impact-Weighted Accounts Initiative. We just kicked it off last year. It’s how you take the financial accounts of a company and impact-rate them based on an assessment of their positive or negative externality along different metrics. 

On founding Asha Impact...

I was thinking about how I could use my business skills to help entrepreneurs who are trying to do great things and make a lot of money. That’s where the capitalist mindset comes in. What are the areas where I could make a big difference in India? For example, if you look at what Asha Impact focuses on, one of the areas is financial inclusion — investing in companies that bring the bottom of the pyramid into the financial system. It’s the realisation that there is a whole market out there. 

India has about one billion people. Most private capitalists are focused on the top 100 million and most government spending is focused on the bottom 400 million. So there’s a massive market whose needs are just not being met. These people would love to get products and services that increase their quality of life. We’ve invested in affordable housing companies, waste management companies and education companies. We are also getting into agriculture, because that’s a big part of the economy and it gets income into the hands of the small farmer. The whole area of impact investing in India has grown in the last two or three years, and I’m encouraged to see that more and more Indians are investing in this pool of capital.

On being hopeful about our future…

I have three kids who are between 23 and 30. I see how they act and behave. I think the younger folks are scared that if they don’t push things, they’re the ones who are going to suffer. Thirty years from now, my kids will be roughly my age. If they haven’t dealt with social unrest, massive unemployment, climate issues, they realise they are going to suffer. Even if you don’t think about it as a magnanimous thing, think of it purely as a selfish thing. As they get into more and more positions of decision-making and influencing outcomes, I think it will be good for the world.

On taking collaborative action now to solve global threats… 

It’s got to be a combination of government, private sector, investors and consumers all coming together. What happens when the coast starts disappearing and there are droughts all over the place and you have massive migration of millions of people because there’s no food? You can have the approach that you don’t care because that problem is 20 years away. But then you still have income inequality to deal with now. It’s just not sustainable. I think people are realising this. More and more companies and investors recognise that it doesn’t have to be: “I can only do good and make money at different times.” 

On what he’s learned about himself in this latest phase of life…

I think I’ve really learned about my softer side in the last seven or eight years, by listening to people, learning from them and thinking longer-term. I probably did a lot less of that when I was buried in the day-to-day stuff and trying to put out fires every other day. I think I’ve had the opportunity to really step back and reflect a lot more. 

Final thoughts?

I jokingly say that, hopefully, the course we’ve developed at HBS will be completely redundant in five or 10 years because impact will have been incorporated into everything by then and you won’t need a separate course for it. That’s the hope, and I think that probably will happen.



Vikram Gandhi is a Senior Lecturer at Harvard Business School. You can read more about his work in Business Management and Entrepreneurial Management here.