World Economic Forum: “Here’s how impact investing can change the world”

More and more businesses are taking an enlightened view of their role in society. A simple idea — that you can do well by doing good — has created exciting new business opportunities and inspired investors to rethink where they put their money.

Impact investing – which consists of private equity and some specialty bonds such as green bonds — has traditionally been the domain of the development institutions and specialist funds. But it is growing rapidly as investors look for ways to generate benefits for society alongside financial returns. The impact market expanded fivefold between 2013 and 2017, reaching $228 billion globally last year. That’s impressive growth. Yet impact investing can potentially grow much larger, with dramatic implications for the world’s development agenda.

Today, development financial institutions and specialist fund managers account for three-quarters of the impact investing market. Asset managers make up the rest of the market. We need to flip this ratio and grow the market exponentially by bringing large numbers of institutional investors into the impact market.