Impact investing is about using markets and money for social good. Impact investing is built on the belief that private capital can play a powerful role in solving the massive global challenges of our day, and that capital markets should work for good as well as profit. This vision is realized through investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.
Every month, PCV will give you a roundup of what’s new in the field, what conversations are taking place, and how you can get involved. Here are some highlights from September:
[custom_headline type=”left” level=”h3″ looks_like=”h4″]The Impact Investing Landscape Around The World[/custom_headline]
At the 71st Session of the UN General Assembly in September, impact investing was discussed at a confab hosted by New America and Concordia. The U.S. State Department and Bretton Woods II introduced the Trillion Dollar Challenge, intended to help achieve the UN’s 17 Sustainable Development Goals by 2030.
Specifically, they’re calling on the world’s largest asset owners, such as pension funds, sovereign wealth funds, and endowments, to invest some of the $25 trillion they manage in ways that mitigate global risk and reduce volatility, that promote development and good governance, and in the process save the planet and humanity. U.S. embassies are willing and ready to offer investors suggestions of tax and regulatory incentives with host governments. Read more >
Most of us read this week that with the signing of the peace treaty in Columbia, the western hemisphere is now completely free of conflict for the first time. Latin America is a region with great promise yet plagued by social inequalities. As a new report from the Aspen Institute points out, Latin American countries are approximately 30 percent more unequal than the world average, and changes are needed to improve education and healthcare and to create more formal employment opportunities. Impact investing has grown quickly within the past five years and demonstrates that effective collaboration among a growing young population of entrepreneurs, financial markets, and local governments can help solve social challenges and spark job creation. Read more >
Over in Australia, home to one of the world’s largest deserts, we’re seeing how saving just a small amount of water in water-scarce regions that goes to irrigated agriculture can free up a great volume of water for cities, other farmers, and nature.
Nature, however, is often last in line when it comes to getting more water, even when farmers use less. Creative financing solutions that leverage existing water markets can help drive balanced water use and support important conservation goals. Operating within existing water markets, The Nature Conservancy has developed a concept to acquire water-use rights from willing sellers. WSIPs deploy investor capital and other revenue sources to acquire these rights, which can then be reallocated to depleted freshwater ecosystems, or sold or leased to other water users seeking more supplies, thereby generating financial returns for investors. Read more >
[custom_headline type=”left” level=”h3″ looks_like=”h4″]Impact Investing, Government, and Civil Society[/custom_headline]
Smaller, postindustrial cities dot the landscape. Often far from major metropolitan regions, these cities are struggling to build, or arrest the decline of, their economies and are home to sizeable communities of low- and moderate-income (LMI) individuals and families who are not well served by traditional economic-development activity that seeks to attract large-scale employers and prioritizes job volume over job quality. A new paper from our friend Katie Grace at Harvard details how community investment can provide a foundation that can be built upon to support LMI communities and the cities where they live. Read more >
The first social impact bond was introduced six years ago in the United Kingdom, and the concept has since attracted growing interest across the United States. To date, 10 different pay-for-success projects have been launched in the U.S., and a project in Connecticut will soon launch. In a recent report on the topic, Third Way, a centrist think tank, calculated that, worldwide, “60 SIBs have been launched in 15 countries with a total investment over $200 million.” Read more >
Impact investing is building momentum for young people. The Jim Casey Initiative from our friends at The Annie E. Casey Foundation — which tracks how well young people are faring in critical areas such as permanence, financial capability, housing, and physical and mental health — has just released a new report that points to notable strides among young people who have participated in its Opportunity Passport impact investment program, a matched savings program that helps build financial capability. Read more >
Another major intersection of impact investing and local governments is the CDFI movement. Since its inception, the CDFI Bond Guarantee program has given CDFIs access to $852 million in low-cost, flexible, long-term capital. They’ve turned around and used that capital to help finance affordable housing, new or renovated commercial space, healthcare facilities, schools, daycare centers, dedicated senior housing and more, in exactly the kinds of low- to moderate-income neighborhoods that large institutional investors ignore. But that’s still a drop in the bucket compared to mainstream finance. In order to help CDFIs crack that nut, the CDFI Bond Guarantee Program allows CDFIs to raise capital using a structure that most large institutional investors are very familiar with: a bond. Read more >
[custom_headline type=”left” level=”h3″ looks_like=”h4″]BlackRock Goes Big[/custom_headline]
BlackRock has launched the BlackRock Impact Bond Fund, a mutual fund that aims to generate competitive financial returns while investing in measurable social and environmental outcomes. The Fund will be the first broadly available U.S. fixed income fund launched by BlackRock since the formation of BlackRock Impact, the firm’s $200 billion sustainable investing platform. Read more >
[custom_headline type=”left” level=”h3″ looks_like=”h4″]The Rise Of The Impact Unicorn[/custom_headline]
We’re all familiar with how the traditional venture capital world talks about billion-dollar “unicorns” like Uber. An “impact unicorn,” according to our friend Fran Seegull, is a company that is positioned to achieve a market rate of financial return and high levels of impact. Impact unicorns achieve strong financial returns because of, not in spite of, their impact theses. Read more >
[custom_headline type=”left” level=”h3″ looks_like=”h4″]Inclusive Ownership As A Tool for Addressing Inequality[/custom_headline]
Our recent work on developing a framework for how impact investors can invest for, and measure, job quality, had five facets. One of those facets was a fair and engaging workplace. Now, according to Democracy Collaborative, more and more community-development and city leaders are looking to inclusive ownership models that more evenly distribute wealth and assets throughout the wider community as tools to create jobs and build community wealth. Read more >