Impact Investing: Moving from the margins to the mainstream, but where to next?
As we look forward to The Economist Event’s upcoming Climate Risk Summit on July 21, 2019, we reflect on their most recent impact investing conference that was held last February.
Gathering financiers, CEOs, academics, and philanthropists, The Economist Events hosted its third annual impact investing conference, “Investing for Impact: Leading for the Long-haul?” earlier this year in New York City. Outfitted in The Economist’s classic bright red, 10 on the Park at Time Warner Center became the impact investing brain trust for discussing hot topics within the industry.
Strategies surrounding impact investing will continue to be refined, making effective communication fundamental as firms look to educate the financial sector and provide clarity amidst the evolution.
At a bird’s-eye view, the event’s first panel highlighted a major theme of the conference: impact investing has finally earned a collective buy-in, but its next steps are shrouded in uncertainty. To kick off, headline speakers fielded an opening debate. Motion: This house believes that impact investing will turn out to be the most profitable way to invest. Lisa Hall, of the Beeck Center, Ronald Gilson, Professor at Columbia University, John Goldstein of Goldman Sachs, and Michael Chu of IGNIA took the stage. Throughout the debate, it became clear that the speakers were in basic agreement that impact investing is the desired direction; their opinions only differed in how to advance.
Some key takeaways from the event:
- Impact investing can provide innovative solutions to long-term social crises
Attendees remarked that the most memorable panel was a breakout strategy session on refugee finance. Experts estimate that due to climate change, there will be an estimated one billion refugees on the move by 2050. Investing in refugees can help expand livelihood opportunities while stimulating economic development for their host countries. The panel’s speakers shared that refugees tend to have high repayment rates of loans, allowing their investors to achieve desirable returns in addition to empowering communities.
- To get past “greenwashing,” transparency and accountability go hand in hand
How do we measure the “impact” in “impact investing? Throughout the event’s panels, the conversation often returned to the industry’s need to reach a consensus on metrics. Andrew Steer of World Resources Institute remarked how indeed, the metrics are improving, and the impact investing needle of progress is moving. However, in order for the metrics to fully measure social impact, financial firms, companies, and supply chains must establish greater transparency and accountability.
- Ingenuity requires collaboration across diverse stakeholders
From small scale to big picture, engagement across diverse stakeholders is key. Fund managers, CEOs, governments, and entrepreneurs must all be “in the mix,” according to Goldstein. Putting this perspective in practice, Jim Massey of AstraZeneca shared a personal anecdote. By looking beyond the sustainability team and engaging the company’s full social network, AstraZeneca unlocked solutions to reducing their green fleet’s carbon emissions.
Strategies surrounding impact investing will continue to be refined, making effective communication fundamental as firms look to educate the financial sector and provide clarity amidst the evolution. For these purposes, content such as insights and white papers, as well as a definitive communication strategy, can help a firm convey its core values and differentiators. As new stakeholders engage with impact investing, these key developments will help continue advancing the field.
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