Meet Priya Parrish: An Impact Investing Expert

Oct 11, 2021 | Kayo Women, Your Community, Your Super Powers

Priya Parrish is Managing Partner at Impact Engine. She also is Professor of Strategy and Impact Investing at The University of Chicago Booth School of Business where she teaches, mentors, and supports MBA courses and programs about impact investing.

We recently sat down with Priya to learn more about her career journey and how she got into Impact Investing.

Can you share about your role and background in impact investing?

At a young age, I was an entrepreneur and wanted to use those skills for social good. This sparked my interest in impact investing, which I pursued coming out of college by working at the very first ESG ratings provider, a group called KLD. There, I led a project to sell their research and indices, not just to the socially responsible investing (SRI) financial advisors, but to mainstream asset managers where we created the first ESG ETF on the iShares platform. I then joined Northern Trust as a product manager where I initiated the launch of their ESG practice. Afterwards, I wanted to gain more investment skills and spent a bulk of my career at a large fund of hedge funds called Aurora Investment Management, and from there became the Chief Investment Officer of a single family office. In 2008, I joined Impact Engine to go back to impact investing, but now as an experienced investment professional.

What is a bottleneck for you right now?

Capital. Some believe that talent is the bottleneck in impact investing, but there is an oversupply of talented investment professionals seeking impact investing jobs. Everyone sees the headlines about the high growth rates in allocations to impact investing, but it’s off a small base. It’s still very difficult for newer firms and smaller firms, which is the vast majority of impact funds, to raise capital.

What trends in Impact Investing are most interesting to you right now? Where do you see the industry moving in the next 3-5 years?

Over time, I think we’re going to see managers develop more specific impact strategies for their markets. So, if you’re an investor in healthcare, or you’re an investor in like B2B service companies that tend to employ a lot of low-wage earners, or if you’re investing into sectors that have really complex supply chains, your approach to impact is very much going to vary. And that nuance will only come with the first step of honestly asking the question, “how can we create impact with our investments” rather than starting with the more common decision to say you drive impact without determining what or how.

I’m hopeful that we’re going to see more LPs educated and supporting GPs doing this, and it being a real back and forth relationship.  We think this is a critical role for LPs, and it’s why we make investments in companies and funds.

What has the last year been like as an entrepreneur?

I’ve invested in a lot of new funds or emerging managers over my career. But until you step into that seat of being a new fund manager and experience all of the structural barriers to entry, you don’t realize just really how hard it is. And so, it’s been a lot of hustle and perseverance. It’s also required a lot of educational conversations, as most investors don’t start with the decision to make an impact investment. We have to help them understand what it is, how we do it, and why it can generate just as strong returns as non-impact investments.

What guides you to want to teach and train the next generation?

I think that good impact investors are critical thinkers and they’re problem-solvers. And they’re creatives with a technical skill. And you don’t get that by following a linear path that Career Services told you to pursue, but rather by charting a multi-disciplinary path. So, anyone pursuing this career needs support, and I’m passionate about helping the next generation. This is why I teach impact investing at the University of Chicago Booth School of Business. I hope that one day you can’t get a finance major at any business school unless you took impact investing and impact investing is actually incorporated in your finance class.

What advice do you have for women who want to create impact in an industry where it isn’t as intentional? 

There’s this word – additionality – that impact investors use. It refers to the impact created specifically by your investment or involvement. The interesting thing about private equity is that you win by having influence and creating value. So a good investor is already in the position to create additionality. It doesn’t matter whether you’re investing in sectors that are considered impactful or not. In fact, a private equity investor in the industrial sector, for example, can create impact by engaging with its companies on their environmental practices or employee safety policies. If you have a long enough time horizon, these efforts are financially material and can lead to strong performance.

Priya is speaking at the Kayo Women’s Private Equity Summit in Boston on June 15th where she will be apart of a panel discussing Impact Deals. Register here to hear Priya speak.