Impact investing is about a very simple, progressive idea: markets and money for good. Impact investing is built on the belief that financial tools 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 early in the new year:
Impact Investing Goes Mainstream
Hot off the heels of president Obama describing impact investing without naming it, impact investing gets prominent attention in NYT Op-ed by David Brooks. Brooks looks into failure of the free-trade-based market, as well as the never-ending government gridlock, that’s tarnished both institutions over the last thirty years. He then posits impact investing as a promising tool to find a third way: “Impact investors seek out companies that are intentionally designed both to make a profit and provide a measurable and accountable social good.” Read on.
Can Impact Investing Drive Economic Mobility?
More than 32 million children live in low-income families, and racial and gender gaps persist. For the first time, Americans do not believe life will be better for the next generation. We have both a moral and an economic imperative to fuel social and economic mobility in this country. At the start of the new year, Aspen Institute released a report on using impact investing to improve economic mobility in the U.S. Read on.
Impact Investing By Any Other Name
Impact Investing was a big theme at the World Economic Forum’s Davos Conference — though they positioned it as “reimagining business” for social good. By 2030, more than $30 trillion in global wealth will transfer from baby boomers to millennials — a generation that consistently cites social impact as one of the most important roles of business. And with them, impact investing and socially responsible investment options are moving from margins to mainstream. Read on.
Investment Initiatives To Create Jobs
On his trip through India, President Obama announced a new fund created in partnership between Calvert Foundation and USAID that will encourage the Indian diaspora community to invest, create jobs, and support social enterprise in India. With this investment, Indian-Americans and others will be able to support financing for businesses that tackle poverty across India, working in critical sectors like education, financial inclusion, agriculture, healthcare, water and sanitation, and renewable energy and energy efficiency. Read on.
A Banner Year For Green Bonds
According to Forbes, there were $36.6B in green bonds issued last year. That’s more than triple the amount issued in 2013. There’s a lot of room to grow, though. There needs to be an average additional investment of $1 trillion a year in clean energy projects by 2050 if we want to avoid the most calamitous effects of climate change, according to the International Energy Agency. Read on.
Major Investment Funds Are Growing
The U.S. Small Business Association just announced that the Impact Investment Fund of the Small Business Investment Company (SBIC) tripled in the last year. The SBA began 2014 with two impact funds managing $182 million, and ended the year with six funds collectively managing over $500 million in total assets. But, there’s still room for improvement. The SBIC Impact Investment Fund is still below its originally expected $1 billion level, and three of the six Impact SBICs have not deployed capital. Read on.