PLY: Analysis of the state of impact in two stories today:
Sonal Shah – GreenBiz
Based on an understanding of the complexity of development and the critical need to leverage private capital (debt, equity and blended instruments), expertise and in-kind investment, the International Development Working Group offered three recommendations:
- Create an impact finance facility that can help cultivate and develop new and innovative companies and business models so as to develop a pipeline of investment-ready proposals.
- Create a development impact bond outcomes fund to facilitate the rollout of pilots worldwide.
- Improve metrics, increase transparency and provide the additional resources needed to build the broader enabling environment or ecosystem for impact investment.
As the importance of social impact investment grows, there is a need for new business models, financing vehicles, standards and policies to build and bolster ongoing investments, and to bring them to scale.
Investing in the future means more than making money for retirement.
Among everyone from millennials – who make up 34% of the workforce and recently became the largest age group employed in the US – to baby boomers, there’s a growing trend of “impact investing”. Practitioners of this method seek to generate not just long-term financial returns but also positive environmental, social and governance (ESG) results. Along with individuals, impact investors include institutions like hospitals, medical schools and religious organizations who view their money as a way to achieve a greater and more purposeful impact.
The trend toward impact investing is also leading to new models that capitalize on the power of entrepreneurs and capital markets to drive social change. A case study in the Harvard Business Review highlights innovations that link social performance to financial returns, such as social impact bonds. Launched in the US earlier this year, these bonds connect service providers with investors who provide the initial funding for programs; the government agrees to pay back the investment if the program achieves its goals to improve lives. Investors, then, can reap both social and financial returns.