The Future of Investing is Impact Investing

(Originally posted on the U.S. Impact Investing Alliance website, available here. The Intentional Endowments Network is proud to sit on the Alliance's 8-member Industry Advisory Council of leading impact investing network organizations. Together the organizations on the Council represent over 800 members representing trillions of dollars of assets under management.)

By:  Darren Walker, President, Ford Foundation and Chair, U.S. Impact Investing Alliance

Fran Seegull, Executive Director, U.S. Impact Investing Alliance

The United Nations estimates that achieving its 17 Sustainable Development Goals by 2030 will require trillions of dollars. The global goals aren’t the only way to measure our challenges, but they do paint a clear picture: given the scale of the problems the world faces, it’s clear that traditional sources of capital, like government aid and philanthropy, simply won’t be enough.

That’s why we must reimagine how we invest. Increasingly, many of us have begun to consider the role of private capital, with billions of dollars now being allocated to impact investments each year. But this is just a small fraction of the total assets available, with global capital markets today valued at well over $200 trillion. If we redirected even a small portion of that sum towards new investments with positive social and environmental impact, we, quite literally, could change the world.

That is why we are thrilled to introduce the U.S. Impact Investing Alliance

The U.S. Impact Investing Alliance is a field building organization that works with partners across the American impact investing ecosystem. We’re working to transform finance by putting measurable social and environmental impact—alongside risk and financial return—at the core of every investment decision. And to make that vision a reality, we have developed a three-pillar strategy.


1. The Alliance will advocate for a policy environment that enables the impact investing industry to mature and grow. 

Already, the Alliance has benefited from the tremendous work done by our precursor organization, the U.S. National Advisory Board on Impact Investing. As documented in the report, “Private Capital Public Good,” the National Advisory Board was able to help catalyze energy into action, joining a number of existing advocates in pursuit of long-standing policy objectives.

Now, the Alliance looks to build on those successes as we continue to champion the cause of impact investing with federal policymakers. We will build on the momentum of recent policy advances— modernizing fiduciary duty, advancing outcomes-based funding, and empowering shareholder engagement—and we will seek out new opportunities to unlock impact capital.

 

2. The Alliance will mobilize the supply of impact capital, with an initial focus on institutional investors such as foundations and pension funds. 

To spur more impact investment, the Alliance will partner with existing organizations to help amplify their work, coordinate across networks where appropriate, and fill gaps where needed. We will continue to convene the Presidents’ Council on Impact Investing, which comprises the heads of 20 U.S. Foundations deeply committed to practicing and promoting impact investing. And we are excited to be launching the Industry Advisory Council, which brings together networks of committed impact investors to help guide and advance our mission.

Working together, we can break down barriers in the public and private capital markets to promote collaboration and engage new investors. We believe it is possible to find impactful investments at scale globally and across asset classes, but doing so will require developing new strategies, tools, and allies across the industry.


3. The Alliance will bring together leaders across the ecosystem to help advance the impact investing movement.

 If we want to take advantage of the opportunity before us, the time to act is now. In the next 30 years, $40 trillion in wealth will transfer to women and millennials, two segments of the population that strongly believe in aligning their investments with their values. This represents a tremendous opportunity, and can serve as a call to action to those in the financial industry and beyond.
We need to communicate to every investor what it means to make impactful investments—and how they can join our movement. We need to move innovations to market with technologies and products that enable impact transparency. And we also need to refresh our understanding of what drives long- term value, especially as we move from the paradigm of maximizing shareholder value to one that seeks to maximize stakeholder value. Most of all, we need to recognize that while we’ve progressed a great deal, impact investing is still a nascent field—and we still have a lot to learn. But together, by supporting a powerful network of institutions, individuals, and ideas, and with careful experimentation and radical thinking, we can ensure that the impact investing movement will continue to grow.

The shift toward impact investing is already well underway. If we engage with government proactively, mobilize institutions to action, and empower bottom-up movement building for impact, we can unlock the potential of private capital to help address the world’s greatest problems.

Read the full press release on the Alliance, here.