Impact Investing in Germany 2020

In the five minutes it takes you to read this, another 50 people will have died with COVID-19 across the world. Well over 1,000 people will have contracted the virus. And the economic consequences will have reached many more people, creating a lasting and damaging legacy spanning health, jobs, education and more. 

There have long been strong reasons to develop impact investment, but right now there is an urgent imperative. Impact investing, which intentionally seeks positive outcomes, and measures and reports both the positive and negative consequences of investment alongside financial results, can help drive a just and sustainable recovery from the effects of COVID pandemic for all people and our planet.

The impact movement is at an inflection point. When 2020 data is released, impact investment assets under management are expected to have reached the $1 trillion milestone. More broadly, over 30% of listed assets globally have some form of ESG focus. This is an industry and an ideology that is gaining traction the world over. But it needs direction and tools to evolve and grow.

Looking into 2021, there will be two factors at the heart of our efforts: working on how impact investment can help in the COVID recovery; and building a resilient and sustainable investment system for the long term. Last year, the GSG’s Global Leaders Meeting identified a set of action areas which we are implementing to address these two imperatives. They will translate into a number of priorities for us and our movement in 2021.

  1. Advocating Impact Investment to the G7 and G20

    Throughout 2021, we will engage with the G7 and G20 to advocate for impact investment that can help the world build back better. For example, with the G20 hosted by Italy later this year, we will be working closely with the official business dialogue group, the B20, contributing as an official partner on the Finance & Infrastructure Taskforce.

  2. Stimulating the Debate and Facilitating Impact Transparency

    Following the publication of IMPACT, the GSG’s chair Ronnie Cohen has been vocal on how the private sector and businesses can change to create a fairer economic system that benefits people and the planet. The message is being increasingly heard by the media including American investment weekly Barron’s and UK-based financial daily the FT.

    The discussion about measuring and reporting on impact has taken hold across the financial and corporate sectors, but there are still too many different incompatible systems. We need a coherent approach for standards, reporting and transparency. The GSG will build momentum behind the impact movement towards a resilient and sustainable investment system for the long term.

  3. Promoting tools to drive the COVID recovery, including results-based financing

    The pursuit of a fair and fast recovery is complicated by the fiscal constraints the crisis has placed on governments around the world. They will need to invest their own resources better and attract private capital on a scale not seen before. Impact investing can bring private capital to public good, to address the crucial issues facing the post-COVID world.

    The widespread adoption of results-based financing (RBF) solutions is probably the single greatest evolutionary step to foster impact-driven economies. These programmes tie investors’ rewards to the delivery of positive benefits in society, often in the fields of education, health or work training for the unemployed.

    The GSG has brought together a panel of global experts in this field to foster that cultural shift among governments and increase understanding of results-based financing more widely. We have just launched a guide which shines a light on this highly promising area of funding. You can download the report and read our blog for World Economic Forum on the topic.

  4. Highlighting the Link Between Environmental and Social Agendas

    Our work has historically focused on how impact investing can help on social issues, such as education, health and access to housing, engaging with partnerships to connect on climate issues. Increasingly, the green and social agendas are inextricably linked.

    Climate change is now already with us, often hitting hardest the poor and vulnerable. There are many examples of climate mitigation measures being resisted when they don’t incorporate social justice, as seen in the Gilets Jaunes movement in France. But there are also many opportunities to create environmental and social benefits at the same time.

    It’s time to make a much more direct connection between social and green imperatives. The GSG will be working this year on bringing these two areas together through our advocacy work both nationally and supranationally. A good example of this is the Green Plus Gilt financing innovation from the Impact Investing Institute, the UK’s National Advisory Board and a member of the GSG.

  5. Expanding our Network

    Alongside these new issues, our groundwork will continue. There are 20 more countries building their impact investment taskforces, and we will support their development towards joining our existing group of National Advisory Boards representing 33 countries spread across six continents. And as more initiatives blossom, our knowledge management and policy work become ever more important.

    At heart, the GSG is both a convenor and a development agency. We bring people and organisations together in common cause towards a better financial system that can help solve problems on the ground. And we experiment with new ideas and build the capacity of the impact movement, nationally and globally.

The GSG is a charity, reliant on the generosity of donors. We also rely on the time and effort given by supporters around the world, including our NABs. We are honoured to have so many people and organisations with us in common endeavour. Working together, our focus in 2021 will be to help in the recovery, and build a transparent, resilient and sustainable investment system for the future.

Cliff Prior
CEO, GSG

‘Tying funding to results’ is an action guide from the GSG and the Education Outcomes Fund designed to equip NABs better and amplify their efforts to achieve more and better outcomes to pressing social and environmental issues through results-based financing. This publication is the first phase of a wider workstream focused on implementing results-based finance solutions globally, especially in GSG NAB countries. You can download the report and read our blog for the World Economic Forum on the topic.

Please contact julieta@gsgii.org for more information.

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