It was pouring rain the morning when Varan entered the coffee place in Bernikowgården to meet up with me for a cup of coffee to discuss what he’s been up to for the past six months. He pointed to his wet Adidas sneakers: “They’re almost recyclable, you know.”

Throughout the spring of this year, Varan and his team had been working on developing an app that helps people make purposeful investment decisions to reach the 17 UN Sustainable Development Goals (SDGs). They named their app MakeImpact, which speaks to the key message shared on their homepage:

“Impact investing is less about financial gains but more about societal impact. So, the more people that realize the societal and financial benefits of Impact Investing, the more the companies will start to engage themselves in being socially responsible.”

Varan’s interest in sustainability started when we has still a student at Aalborg University. While working on his thesis in 2010-11, Varan spent some time in Australia where he conducted research on ways to persuade people to conserve less water in their gardens because of drought. “Then I came back to Denmark where it was raining all the time, so there was nothing about conserving water in the gardens, because we don’t water our gardens.”

But he found other challenges at home worthy of exploration. Like how much energy/power consumption do people in Denmark actually use during the day versus during the night. And how to convince them to use more wind energy, for free at night time.

“And then I graduated and forgot all about my projects and I started working in the banking sector. People were laughing: What happened?” At that point in time, the only thing he wanted to do was to try out the world of finance.

Varan admits that he didn’t know anything about investment banking back then. With the tech background, his journey first led him to working in business development and new financial products.

“I’ve looked at things from a tech point of view. You have a financial product; finance and IT products have different parameters. So for me investment banking was like, yeah, it’s just IT parameters and you work with money.“

It was through his work in fintech when Varan finally got introduced to impact investing. “The SDGs where only on the rise then”, he explains, “it took some time before it was really on everybody’s mind. I would say that it’s 2019 when it really took off.”

In Varan’s opinion, what we can see today, especially in the financial sector, is the transition from exclusion of sustainability issues to their inclusion: “Previously the investment banking side was like, OK, we don’t want to invest in weapons or  we don’t want to invest in tobacco. Now, what’s happening right now is that they are saying, yeah, of course we don’t want to invest in those things. But we need to invest in things where we’re inclusive, so like gender equality, climate action, quality education, renewable energy resources etc.”

Varan refers to this as “a change in the mindset of the investment banking.”

One example that can help illustrate this is the issue of climate change: “How can we ensure that when we invest our money we invest in good companies? Because it makes really good sense that, if you invest long-term, you invest in companies that will also be there in 20 years.”

“Then it should be companies who are also working on a business model that is sustainable. Sustainable meaning that they’re still there,” he explains further.  

“So you work with fossil fuels today and we know that the fossil fuels will disappear and are not good for the environment. Then why invest long-term in those companies? It’s a no-brainer in my mind.”

So what has let Varan to create MakeImpact? He “saw the light” when attending last year’s Folkemødet (i.e. a democratic meeting between people and politicians that takes place on the Danish island Bornholm each year). Visiting the UN SDG tent where people talked about sustainability made him think about impact investing.

"I was like, there must be some impact investing solutions out there helping people to actually make the right choices. Because we’ve been used to going to the banks and getting their advice. But we can see a change in people’s minds that they want to make their own decisions. We’re making our own decisions about everything.”

Varan believes that the new generation of Millennials, just like him, are especially prone to making decisions on their own. After doing research and trying to find out what solutions already exists out there, he found a lot of impact investing apps that focus on specific themes, like climate, water, and solar energy.

He then looked at the 17 SDGs that, in his view, is “are presentation of everything.”

“That’s why I really like the SDG framework, because it’s so simple. Of course, there are all the sub-goals. But it’s easy to understand, it’s visualized and people can look at the goals and compare them with their own values. And that’s exactly what I wanted to create. The bridge between their own values and the 17 goals, and help them look for companies that are actually doing something about the same goals. And then help people to invest in that.”  

Varan gathered a team of like-minded change makers to start investigating more about how to link the SDGs with investing, especially among people who have never invested before. They ended up creating an app that people who have never invested before as well as experienced investors can use to make more informed decisions about where to invest, based upon their own interests and values.

After finding a good match, the MakeImpact team then helps the users to get in touch with their own bank. “That’s where the money is.”

Accordingly, Varan thinks that solutions like MakeImpact can help the traditional banks in retaining their customers. Thus, many banks today don’t “really know how and what the young generation is thinking.”

Another challenge with the new generation of potential investors is that they appear to be moving away from the traditional banks:

“Nobody trusts the banks with all these things that have happened during the last few years. But we see that the money is somewhere right now. So they need to have some trust somewhere.”

“As Danes often say: Where does your money sleep? At the bank. If you think about it, the money that is on your account, you know, it’s digital today. It’s not something we have in our mattresses anymore. We pay with MobilePay and all those things. We don’t even know what money is anymore.”

Varan believes that “the new type of investors, especially Millennials, are born with a purposeful mindset. We need to do something that the previous generation didn’t do enough of. They talked about it, but they didn’t act.”

And as Varan and I were talking, I couldn’t help but asking why MakeImpact has decided to go hand-in-hand with the banks, considering the trends that Varan mentioned, such as lack of trust among customers and resistance against not being able to make one’s own decisions. Also, isn’t fintech often trying to push back from the traditional banks, in one way or another?

For him, “collaboration is the key for everything,” including the SDGs.

“So I know that there’s a lot of fintechs out there saying, screw the banks, you know, we’ll just do it ourselves. And we could also do that if we really wanted. The first movers are always going to be the ones who will be like, screw the banks. But there are still 90% of the people out there who are not ready to just say this and act on it. Because you have many things in the banks; you have money coming into the banks. So if you want to enable people with money to better the world and invest in the future, then we really need to think about collaboration.”

He believes that while there is a trend among traditional banks of losing their customers to tech companies and new types of banks, we can also see a lot of collaboration in this area.

“I like to believe in collaboration and think that if we are going to nail it this year or the next year, we need to work together with the banks. And of course, if the banks are not willing or ready to play with a startup like ours, then we have to do it the other way around. Then we have to change the business model and maybe create a partnership with an investment platform. But then we will not have the purpose of retaining customers in the banks.”

While Varan realizes that this might mean changing the direction they’ve set out for MakeImpact, he would like to stay true to the company’s main mission:      

“For me, being an impact fintech startup, the idea is not that I want you to move to another place with your money. I want you to use the money to invest in a better world. And whether you’re doing it in an investment platform or in the bank, I don’t really care.”

In this respect, Varan would urge other young people to think about the values that they believe in and care for, when considering getting involved in impact investing:  

“In the end, everything we do today is about our values. So what we do when we get up in the morning, go to work, study, whatever we do,it’s about our values and how we actually feel about using our time. Of course, different people are in different stages and ages and so on. But when you get up in the morning and you’re doing something, it should be with your purpose and meaningfulness in mind.”

The three SDGs that he himself would choose to invest in would be: no poverty, stop hunger, and quality education. Why, you may ask? “I was born and raised in Denmark, but my parents and my grandparents came from a country (i.e. Sri Lanka) where these three things were some of the major problems. Of course, there are many other things. But those are some of the things that are in me,” Varan explains.  

“It’s about people’s values. Full stop. Nothing about how much money and so on. Because, you know, this is about how we change the world and how we make sure that we can take care of our grandkids and that they can live in a world that is sustainable. That’s why our actions today really need to be focused on how we are using our money – leaving no one behind.”  

Varan Pathmanathan is the CEO and founder of MakeImpact, a company that helps individuals make sustainable investment decisions using the UN SDGs framework. After graduating from Aalborg University in 2011, he spent several years working in the banking sector. He has a background in Human Computer Interaction.