2020 Impact Investing Trends: More Ways for More People to Get Involved
We are barely into 2020 and a lot has already happened in the world of impact investing. Over a series of articles, we are identifying some of the key trends we see for the coming year.
In this article, we highlight what’s often referred to as “the democratization of impact investing.” As impact investing grows in popularity with investors, financial institutions are creating new investment products that meet this demand. In turn, these newly created impact funds help fuel growth and expand the ecosystem.
Impact Investment Funds On the Rise
Private equity firm KKR & Co. recently announced that its Global Impact Fund has now raised $1.3 billion. According to an article by VCCiRCLE. The fund is focused on several themes, including “mitigating climate change, protecting clean water, responsible waste management and leveraging technology to enhance safety, mobility and sustainability.”
Specifically, the Fund is focused on supporting progress toward the SDGs, as declared by Robert Antablin and Ken Mehlman, KKR Partners and Co-Heads of the KKR Global Impact Fund:
“‘The UN SDGS were developed to mobilize citizens, policymakers, technologists and investors to address global challenges. As investors, we have a significant role to play in building businesses that contribute to SDG solutions while also generating financial returns for our fund investors by doing so.’”
Citi also announced the launch of its $150 billion Citi Impact Fund, which will focus on women and minority entrepreneurs:
“Citi will invest its own capital in U.S.-based companies that are applying innovative solutions to help address four societal challenges: workforce development, financial capability, physical and social infrastructure and sustainability.
Coming Together to Have Local Impact
While KKR’s focus is global and Citi is centered on U.S.-based causes, some impact investors are interested in creating change at a more local level. For example, a group of impact investors — Actaris Impact Investors — are partnering with the Abell Foundation in Baltimore and the City of Baltimore to launch a $25 million program to improve the city’s local economy.
According to an article by Technically:
“The program is taking an approach to spurring economic and job growth by providing capital to established small and medium-sized businesses. As access to capital remains a key engine for expansion, these businesses often seek out bank loans to secure working capital that will enable them to grow. But in the decade following the 2008 recession, lending to small businesses by the largest banks fell nationally. A 2018 report from Johns Hopkins’ 21st Century Cities Initiative found that overall dollars lent to small businesses in Baltimore fell by nearly one-third between 2006 and 2017, citing a mix of national factors like new regulations and more local trends.”
Impact investment funds are driving the conversation around a growing ecosystem. Their rise will not only create crucial positive social impact, but encourage others to adopt impact investing and, if measured, provide key impact data needed to move the sector forward.
What to Look Out For
We expect even more impact investment funds will be launched in 2020 to meet growing customer demand for investment products that also provide measurable social and environmental benefits. However, more resources to engage newcomers need to be introduced to achieve the desired expansion.
Events are a commonly used method of educating investors and financial advisers about the benefits and opportunities that come with impact investing.There will be a number of impact investing events taking place in 2020 to share insights among investors to progress the industry. This GIIN page lists upcoming global impact investing events happening from February to June.
For US-based events, a list including SOCAP20, Yale’s Impact Investing Conference, the Forum for Sustainable and Responsible Investment and more can be found here. In addition, look out for the upcoming Responsible Business Summit in New York which brings together CEOs, CSOs and ESG investors annually. This year, 650 business leaders are attending — up from 350 in 2018.
Stay tuned for more updates from us as 2020 marches on.
