Co-Founder and CEO, Global Impact Investing network
The impact investing market is at an exciting point in its evolution, and there is strong momentum.
This powerful practice of impact investing — of channelling investment capital toward companies, organisations, and funds that deliver social and environmental impact alongside financial returns — is experiencing impressive growth.
While some leading financial institutions have been engaged in impact investing for decades, the term itself was coined just over ten years ago. Much has happened since then. Impact investing has moved from the margins toward the mainstream, with a rising number of major financial institutions, foundations, and fund managers recognising the commercial and societal opportunities it offers.
We urgently need much more capital working alongside government aid and philanthropy.
New benchmarks are making investment successes easier to measure
There is growing activity on six continents, with assets under management increasing by 13% per year over the last five years, according to respondents of the GIIN’s 2018 Annual Impact Investor Survey. There is growing client demand, growing attention from world leaders, government bodies, and the media. Fund sizes are growing. There is also a growing body of useful research, including benchmarks on financial performance, and case studies of successful investments in areas such as affordable housing, microfinance, renewable energy, and community investing. Overwhelmingly, impact investors report their investments meet or exceed their expectations for both financial and impact performance.
The current financial system is not serving our planet, people or investors
But we are not yet seeing the radical shift we need in order to reshape the capital markets and redirect investment toward some of the greatest challenges facing our world. Global problems are outpacing our solutions. The current financial system is not adequately serving the planet. It’s not serving people. And it’s not serving investors. Impact investing is a powerful solution, but it’s not being applied at scale. We see elements of impact seeping into the broader financial markets, but it isn’t happening fast enough.
The challenges the world faces are very real, very powerful, and very urgent.
Philanthropists and government aid need impact investors
We urgently need much more capital working alongside government aid and philanthropy, flowing to resolve the world’s most pressing social and environmental problems.
Right now, we have an incredible opportunity to build an inclusive and sustainable world where everyone has come to understand the full power of their investment capital, and where investment capital has been transformed into a global force for good.
I believe we can build a world where money does more than just generate more money. Where it is standard practice for all investors to consider the social and environmental impact of their investments. A world where impact is integrated into all financial decisions.
This is the future of impact investing. And this is the future we can build together.