The future of impact investing, the future of the world?
The Global Impact Investing Network (GIIN) has a vision. Realising it, it says, is not only possible but essential to create a prosperous future for people and the planet. Impact investing has a central role to play, but change is needed. The GIIN also has a plan. In ‘Roadmap for the Future of Impact Investing: Reshaping Financial Markets’, it sets out 18 actions across six categories where it considers progress is needed.
1. Strengthen the identity of impact investing
“We need to strengthen the identity of impact investing by establishing clear principles and standards for practice, such as by more clearly articulating the defining characteristics of an impact investor, developing standardised best practices for impact measurement and management, and facilitating collaboration among investors with different goals and preferences.”
2. Change the paradigm that governs investment behaviour and expectations
“We need to reshape the overarching paradigm governing the purpose and responsibilities of finance. Those who control capital must set incentives and design requirements to access their capital that align with positive impact. In addition, the theoretical models and frameworks that underpin investment practice must be updated to integrate impact alongside risk and return.”
3. Expand impact investment products
“The accessibility of impact investments must be increased by developing products suitable for the full spectrum of investors (from retail to institutional) and to accommodate the capital needs of various types of investees (including innovative early-stage businesses operating in frontier markets). This will help translate the current, latent demand for impact investments into a higher volume of activity.”
4. Develop tools and services
“We need tools and services to support the integration of impact into investors’ routine analysis, allocation, and deal-making activities. The essential services provided by investment banks, ratings agencies, and data providers must be expanded to incorporate impact considerations and accommodate the needs of the full spectrum of impact investors.”
5. Bolster education and training
“Education and training of professionals in finance and business is necessary to increase awareness of impact investing, maintain the integrity of practice, and drive talented human capital into the industry.”
6. Policy and regulation
“Policy and regulation can catalyse industry growth by establishing incentives for impact investments and creating a supportive regulatory environment for investors and businesses generating impact.”
The GIIN is a non-profit organisation that champions impact investing. Areas of work include industry events, industry research, training and developing tools and resources for impact measurement and management. The full roadmap report can be found on its website www.thegiin.org