Social and environmental impact are becoming integral parts of decision-making, a shift reflected in the portfolios of leading investors, the decisions of entrepreneurs and businesses, the choices of individual consumers, and the policies of government leaders. The current global impact capital base of $230 billion is growing rapidly, but the world needs an estimated $2.5 trillion annually to attain the SDGs (Sustainable Development Goals) by 2030. The Summit explored the power -- both realized and unrealized -- of impact to catalyze this shift.
“When it comes to how we invest, there is an exciting shift underway, one that takes the current thinking about financial risk and return and adds a third dimension—impact—that measures positive outcomes for society and the environment. Under this new financial model, social impact matters just as much as a company’s bottom line,” said Sir Ronald Cohen, GSG founder and chair. “This Summit brings together more than 700 impact leaders from 53 countries to accelerate the advance of the Impact Revolution. There has never been a greater need or a better time to shift to this new model than right now.
Addressing the Summit in New Delhi, Ratan Tata, Chair - Tata Trusts said “Impact investment being planned by the Global Steering Group (GSG) in various fields would go a long way in meeting the needs developing countries, including India. The investment is going to meet the needs of the developing countries that need investment in infrastructure, investment in infrastructure, investment in connectivity, education, medical facilities. With these kind of investments, which would be monitored, it will be part of new India which our Prime Minister is trying so hard to establish.”
Nobel Laureate Hon. Al Gore, former Vice President of the United States of America and now a leading environmentalist and statesman, made the case for impact investments to achieve climate and social justice. “The vast flows of capital needed mean that impact finance is a crucial part of the solution,” he said in his remarks to the crowd of several hundred.
This was the first year that the Impact Summit was hosted in Asia, reflecting the growing power of India’s impact market. Impact investing in India has grown to be a billion-dollar-a-year industry, with the potential to grow 20 to 25 percent a year. The sector is now focused on scaling new models of impact which will call for unlocking additional sources of capital. The Summit marked the launch of two wholesale funds to further the growth of impact capital in India: India Impact Fund of Funds (IIFF) and the India Education Outcomes Fund (IEOF).
The IEOF is a first-of-its-kind USD $1 billion fund that will use funding at scale from DFIs, foundations, and other institutions to align with the government’s agenda of providing quality education with better learning outcomes. The IIFF will be a USD $1 billion pool of equity and debt funds to finance Impact enterprises focused on social and environmental impact. The IIFF will align itself with India’s own social and environmental goals and the UN’s Sustainable Development Goals (SDGs).
“One of the biggest gaps in the impact investment ecosystem was that bulk of this existing investment coming into India is all equity. There is very little debt. We thought that to truly galvanize India impact investing ecosystem, we need to make sure there is a long-term affordable debt in all stages, from venture debt, to growth debt, that can further catalyze the economy,” said Amit Bhatia, GSG CEO.
By 2020, GSG aims to grow investment capital from USD 150 billion to USD 300 billion and the number of people benefitting from this will grow from 500 million to 1 billion.
Next year’s Impact Summit will be in Santiago, Chile on 7-9 November 2019. The 2020 Impact Summit will be held in Johannesburg, South Africa.