At the Social Capital Markets conference last week, surrounded by thousands of impact investors working in every sector and region of the world, it was clear that the market has advanced and matured rapidly. In the last decade, we have witnessed the impact investing field realize ever-increasing growth of impact assets under management, with a floor estimate of $228 billion in 2017, up from $114 billion in 2016.
But more is needed. The Global Impact Investing Network identifies that “a broader set of investors must be engaged if capital is to reach sufficient scale to match the needs of the people and the planet.”
Just 2 percent of the $200 trillion dollars that comprise the world’s capital markets would be enough to realize the Sustainable Development Goals, with change to spare. Yet this feels far-fetched, due to the constraints institutional investors face, including but certainly not limited to, fiduciary duty, risk-return profiles, and liquidity requirements. To top it off, impact-oriented transactions tend to carry outsized perceived risk, because they often target new and unfamiliar sectors in countries that have a limited investment track record.
Although no silver-bullet solution exists, blended finance is one way impact investors can address these risks and attract additional money and investors toward impact.
To read the full article, please go to Devex.