Impact investing is indeed moving into the mainstream and that indeed means moving SIBs centre stage too…
Moving Impact Investing To The Mainstream
Hats off to the World Economic Forum. Their recent report From the Margins to the Mainstream — Assessment of the Impact Investment Sector and Opportunities to Engage Mainstream Investors is hot off the digital press, and, I think, makes a significant contribution to the global effort to promote impact investing.
First and foremost, it’s a positive development that the WEF decided to play in this space. One of the more startling figures offered in the report was a stat from a recent survey by the CFA Association that discovered that 66 percent of financial advisers were unaware of impact investing. Two-thirds of the investment professionals hadn’t even heard of it? C’mon. Granted that impact investing is a nascent field, but I’m still surprised these professional advisers could be so uninformed. I hope that the WEF decision to commission and disseminate this report will send a message to the very mainstream investors — and their advisers — that we’d like to join the movement. If they are talking about it in Davos, perhaps there will be more open ears on Wall Street, and ultimately, Main Street.
Even for those that have heard of impact investing, there is still a lot of confusion about exactly what the term means. In response to this lack of clarity, the report offers and explains a concise definition: “Impact Investing is an investment approach that intentionally seeks to create both financial return and positive social or environmental impact that is actively measured.”
Impact investing is not an asset class. It is an approach that spans asset classes. Nor is every investment that incidentally creates jobs an impact investment. Intention and measurement do matter. And on the other end, it is possible to make an impact investment in more advanced markets or in sectors that already have some commercial capital engaged. As the report argues, there are ways for investments to intentionally create social value, regardless of the stage of maturity of the enterprise.