In recent years, we have witnessed skyrocketing interest from the broader financial community in the work of impact investors.
The increased enthusiasm has shown up in the mainstreaming of ESG considerations and in the record amount of new capital that specifically targets positive social and environmental outcomes. Just this fall, the Global Impact Investing Network released its latest market sizing figure, estimating that the impact investing market now stands at USD $1.164 trillion worldwide.
At BackBay Communications, we are fluent in the language of impact investing – and we know how to translate. As we look to 2023, we see three primary communications imperatives for impact investors.
1. Fortify Narrative Communications with Data
The so-called “ESG backlash” has been a dominant discussion in the broader sustainable finance space over the past year. In some regards, the flurry of questions surrounding the meaning and marketing of ESG has been a healthy washout after a period of very rapid growth.
But the underlying reality is clear: Market participants are growing more sophisticated in their understandings of ESG considerations and impact investing. The market is increasingly eager to see impact communicated clearly and to see data backing up the impact messaging. Data offers accountability that has, too often, been lacking in the ESG space.
In 2023, we expect this trend of infusing impact narrative with impact data to become more deeply established.
2. Strong Messaging, Strong Fundraise
Investing for positive impact, in addition to financial return, requires substantial firm expertise and resource. So, it is vital for impact investors who are doing this important and challenging work to capture the full value of their efforts. Communications are essential. Without an effective storytelling and amplification strategy, even the most impactful investing may go largely unnoticed.
More importantly for investors who are passionate about the impact they generate, a strong communications program can be critical for attracting new capital. Ultimately, that capital inflow allows impact investors to drive greater and deeper impact.
3.Differentiate, with Clarity
In 2023, we see tremendous new opportunity emanating from the broader financial community’s growing focus on impact. As asset owners increasingly expect asset managers to include some consideration of real-world outcomes in investment decisions, managers can attract additional capital by differentiating themselves on the basis of the positive impact they produce.
The flip side of that coin, however, presents the challenge. As more investors are talking about their ESG considerations and their impact, it has become more difficult to break through the noise and competing claims.
As impact investors seek to stand out in this evolving context of opportunity and challenge, they should not be overly wedded to the language of impact investing – that is, the insider-y jargon that the industry has developed over the past 10 to 15 years. While it is good to be able to speak the language, it’s far better to be able to translate and demonstrate it for the world to understand.