Impact investment first started with a few pioneers who developed small funds with personal motivation and mission to back purposeful businesses. Now the global impact investing market is worth an estimated $502 billion and the momentum is not stopping. We are delighted to have two forerunners from Europe who have been witnessing the evolution, Rodney Schwartz and John Lloyd, CEO and Chief Marketing Officer of ClearlySo respectively, to share their insights on where the momentum is going.
Incorporating ESG elements in businesses would not undermine investment returns. “Good businesses that do well financially, do well impact-wise,” Rodney comments. According to the latest survey by the Global Impact Investing Network (GIIN), more than 90% of impact investors are expecting to meet and exceed their return targets. Investors like Rodney and John tap into all aspects of the company that are related to impact, taking it into a quantitative measurement and assessing the business with a framework and a scoring system. The due diligence process is rigorous to validate the potential of the company for its investment.
Shared in the discussion, impact funds which are subsidized by the government or foundations were slow to move, however, impact investment banks like ClearlySo are seeing a growing number of individual investors to the extent it was institutional. They currently have 2,100 institutional investors, among that normal venture capital and private equity are the fastest-growing portion. Besides the shift in investor base, there is a change of attitude for next-generation to steer towards investing purpose-driven businesses.
That being said, Asia would be a major focus in sustainable finance in the coming future, ever since Japanese Prime Minister Shinzo Abe’s speech in G20 about taking on innovative financing schemes for social impact investing, Japan has been receiving growing attention and investors like ClearlySo are finding ways to gain exposure to the market.
To amplify such momentum, investors could start taking in ESG elements to their portfolio to support sustainability not only by its’ impact for good, but the balance for long term returns. At GoImpact, we want to create an ecosystem where dialogues inspire actions and by facilitating experience sharing from guests like Rodney and John. For more about the sharing, please tune in to their podcast episode here.