A new tipping point
Helping the impact investment market to flourish
There is still much to be done to build capacity on the “demand side” of the market. The supply of impact capital does not necessarily create its own demand. Capacity building efforts are supporting impact enterprises to grow a strong pipeline of investable deals. Through accelerators, incubators and investment and contract readiness programs typically backed by philanthropy and government, impact entrepreneurs are being helped to build sustainable and scalable businesses.
The ability to measure and manage impact in a robust, comprehensive and cost-effective manner is a critical enabler for growth in the sector.
Impact measurement, reporting and management is a growing field. Just as investors began to assess financial risk in the early 1900s after decades of focusing exclusively on financial returns, new tools are now being developed to enable the transition to 21st century capital. Impact performance is beginning to be measured with the same rigor and transparency as risk and return, with new impact accounting conventions being developed for this.
Governments need to establish a supportive ecosystem that incentivizes capital and talent to tackle social and environmental issues.
The role of government in spurring impact investing is crucial but it is taking some time for policy makers to translate their emerging interest in the field into impact-friendly enabling environments. A mindset where government alone is expected to tackle social issues still predominates. A shift is needed to open the door to entrepreneurial innovation and investment in driving social change.