Investing for Social and Environmental Impact: What lies ahead?
At Artemis Impact, we strive to provide solutions and demystify complexities faced by impact investors and creators. In some of our previous blogs, we looked at impact investing as a concept, while also mapping the trend in Southeast Asia and Indonesia.
The story of impact investing, particularly in southeast Asia, has been an exhilarating and interesting one—marked by ebbs and flows, remarkable milestones and galloping towards a highly rewarding, sustainable future. This blog is a recap of sorts and a peek into the future of impact investing. Let us talk about the real and tangible differences achieved by impact investors so far and the trends ahead of them.
Before we go further, let us do a quick revision of what impact investing means.
Impact investing is when investors direct their capital towards generating measurable, sustainable social impact. The Harvard Business Review describes impact investing as, “directing capital to ventures that are expected to yield social and environmental benefits as well as profits—provides investors with a way to do well by doing good”.
Undeniably, the industry has grown multifold, garnered immense attention, assumed legitimacy and created a significant, tangible and measurable impact. Impact investing as a concept is fairly new, slightly over a decade old, therefore, it would be wrong to say that its potential has been realized fully.
However, even before the term was coined in 2007, impact investing was an unnamed practice among global philanthropists such as the Ford Foundation among other trailblazers. Gradually, the need for a dedicated industry was felt and governments, along with global media, pitched in to support the consolidation.
Impact investing has witnessed great success but a lot still needs to be done. Despite remarkable improvement in many metrics, some aspects of global crises, including climate change and the rise in pollution, are far from being resolved and are only worsening. Needless to say, the Covid-19 pandemic has exacerbated the situation further, its aftermath will be felt for a long time and there is much that needs to be done to mitigate the damages before the challenges are completely overturned.
The pandemic brought with it the need to realign with the ‘new normal’. Businesses and governments across the world were forced to change their way of functioning to quickly adapt in the face of unprecedented challenges. In the past year and a half, we have seen the global economic system crumbling, health infrastructure collapsing, businesses shutting shop and people suffering. Impact investing, is at an extremely pivotal juncture at present, faced with unimaginable opportunities and possibilities of setting so much right.
Need of the hour
After working closely with impact investors and creators, there are a few things that we think are absolutely necessary for the industry going forward, we share some of them below:
- There is a need for accountability and transparency. It is a fact that impact measurement and reporting lack standard parameters, a uniform formula. For the global impact industry to work together and in tandem with governments and businesses, it is important to address this bottleneck.
- Investors must have a strong grip on what they are betting on, and statistics to validate their achievements. This requires the development of better and robust metrics.
- More product innovation to facilitate better investments.
- The industry must find ways to incorporate and accommodate diverse social or environmental objectives.
- Developing infrastructure, such as a dedicated social stock exchange.
There is a pressing need to create vast-scale and timely social and environmental impact, alongside gaining financial returns. However, impact investing alone isn’t sufficient to tackle some of the most pressing contemporary global problems. It has to go in tandem with other parties and stakeholders to achieve greater results—governments, businesses, communities, along with the impact industry, must resolve to strive for a better, sustainable future.
A note on Southeast Asia
With respect to Southeast Asia, the early-stage funding gap still emerges as a pressing concern that needs tackling, ending reliance on foreign investments is another challenge. There is a pressing need to focus on local investors and small-scale investments over big-token deals, besides exploring new impact sectors.
To learn more about impact investing, leading an impact project and impact creation and measurement, refer to our blogs. Also, do not forget to check out our Artemis Impact platform, tailor-made for all impact leaders and creators to measure impact.
Artemis Impact is a network of corporate, donors & non-profits. With our corporate enterprise solution, we aim to empower companies to build human-centered impact stories and create sustainable impact with their CSR programs & core business.