27.6.2018

New Ambiguous Future Roadmap for Impact Investing and Renewal in Financial Markets

Global Impact Investing Network (GIIN) has created new vision and roadmap for impact investing and financial market renewal for the future with the support and financing from Rockefeller Foundation.

Formal global impact investing market have existed over a decade. Market, investors and investments have all grown incredible in impact investing. But these impact investments have generated only a fraction of the positive impact needed to address the global challenges facing our economies, communities and planet.

“New more ambiguous ‘Future Roadmap for impact investing’ is needed, which aims for all investments to make positive impact in sustainability and spur systemic change in the global financial markets. It is stated that all future investments and investing have positive impact in sustainability integrated in them.”

The Future Roadmap for Impact Investing includes eighteen (18) identified actions across six categories, which are strengthening the identity of impact investing, changing the paradigm that governs investment behavior and expectations, expanding the impact investment product portfolio and offering, developing better tools and services, bolstering education and training, enhancing the policy and regulation to provide better incentives to making more impact investments and generating positive impact in business.

Global Impact Investing Network (GIIN) vision is to create a world, in which environmental and social factors are routinely integrated into all investment decisions in the future.

We get the changes in businesses, in management and in investors that they will more responsibility and hold themselves accountable to multiple sets of stakeholders – shareholders, employees, customers, suppliers, affected communities, local and global environments – with their decisions. Finance theory and investment decisions will have equal weight of risk, return and impact in their considerations. The end result will be that more holistic considerations of impact becomes the default and standard in all investment and business decisions in the future rather than being just the exception in investments.

Impact Investing Value-Added

Impact investing have provided and provides much-needed capital to businesses and solutions dealing with the most critical social and environmental challenges – climate change, inequality, exclusions and so on – that we face in the world today. States, governments and philanthropy resources and capital have been insufficient to solve these problems. Impact investing and investors have implement strategies and taken actions to both bridge these gaps and finance new models for solving these critical global problems.

Impact investing and investors pursue strategies that focus on long-term value creation and good returns in the long-term and for a diverse set of stakeholders rather than only maximizing short-term profits and value for the shareholders without concern for anything else. Short-term profits, limited sighting view and related actions have been criticized by many owners, business leaders and ordinary citizens in recent times.

Ambiguous Vision and Roadmap to Impact Investing

Demands need to be raised about the potential that responsible investing and investments can impact more positively to sustainable future economic, environmental and societal development in the long-term.

GIIN ambiguous “Future Roadmap for impact investing” includes 18 concrete actions in 6 categories, in which us all and especially impact investors should promote and enhance to achieve the vision and targets set for more sustainable future. These categories for action are the following:

  1. Strengthen the identity of impact investing

“We need to strengthen the identity of impact investing by establishing clearer principles and standards for impact investing practice, articulate the defining characteristics of an impact investor and investing better, develop standardized best practices for impact measurement and management, and facilitate collaboration among and between investors with different goals and preferences.”

  1. 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. The theoretical models and frameworks that underpin investment practice and decisions must be updated to integrate impact alongside risk and return.”

  1. Expand impact investment product offering

“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 from innovative early stage companies to businesses operating in frontier markets. This will help translate the current, latent demand for impact investments into a higher volume and more impact.”

  1. 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.”

  1. 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.”

  1. More incentive policy and regulation

“Policy and regulation can catalyse industry growth by establishing more incentives for impact investments and creating a supportive regulatory environment for investors and businesses generating impact.”

Future Roadmap and big transformative changes needed require us all to view the future as something that we can shape and create with our own actions. We are not powerless to influence and change the world. We need deliberate, focused and coordinated actions from impact investing visionaries and other visionary leaders to be committed to create new, better and more sustainable future. We need the will and determination to create something new, better and more sustainable world for all us in the future.

Vision, purpose and aims need to be clear. We need to communicate clearly and systematically these so that we can get the impact to be integrated to all finance and investment decision in the future.

 

*The GIIN is a non-profit organization that champions impact investing. Areas of work that GIIN does includes the following: industry events, industry research, education and training, and developing tools for impact measurement and management. Additional information can found at www.thegiin.org.