The Year Ahead: Impact Investing and Philanthropy in 2022 By Patrick Briaud
Over the past decade, impact investing has experienced astounding growth, with an increased focus on addressing some of society’s most urgent issues. Patrick Briaud, senior advisor at Rockefeller Philanthropy Advisors, looks back at the growth of impact investing 2021 and at how the field will evolve in 2022.
What’s driven the growth of impact investing in recent years?
In various forms, impact investing has been around for decades. The significant growth in the last 10 years, however, has brought the concept to every bank, wealth advisor, and financial news outlet. Since 2012, we have seen a 10x growth in market size, now representing one in every three investment dollars in the United States.
A few factors are driving that growth. The two that we find most interesting are the increased role of women and next-generation wealth holders in investment decisions, including $30 trillion passed down from Baby Boomers. Then, there are particularly urgent issues such as climate change and racial equity.
Ultimately, impact investing is here to stay. The question now becomes: How thoughtfully will asset owners integrate the two core considerations of impact and financial return, and can we help the long-term trajectory of this practice at its current inflection point?
How investing in social impact networks can spur innovation and change
Social impact networks use the best of collective human capital to address pressing issues.
These networks are already used within organizations, but challenges such as COVID-19 and the climate crisis require mobilization beyond traditional boundaries.
Promoting diversity and inclusion within these networks is key to their success.
When the COVID-19 pandemic closed schools in 2020, it was often teachers, parents, non-profits and other local leaders who banded together, mobilizing existing relationships to find solutions and enact change. They tackled the crisis and associated systems failures through innovative use of collective human capital.
COVID-19, the climate crisis and other complex challenges of our time require us to tap into the best of our human capital. As a result, investing in social impact networks to diffuse human resources, create capital for members and start a ripple effect of impact has become a necessity.
Raising your impact ambition – A case for impact investment
Investors are increasingly opting to go beyond ESG considerations to support positive change through impact investing. Impact investors connect the pursuit of risk-adjusted returns with the delivery of positive real-world outcomes, often connected to the UNs’ Sustainable Development Goals (SDGs).
Investment in social funds leads to a reduction in charitable donations by Tel-Aviv University
A new Tel Aviv University study, the first of its kind, examined whether there is a connection between the rapid growth of investment in social investment funds and the decrease in donations to charitable organizations. The researchers studied the actual investment behavior of approximately 10,000 clients of an investment app, and found that investors switching to a recently introduced social fund reduced their donations, mainly in charities supporting causes similar to those of the social fund. However, the researchers also found that most of the investors in the social fund had not previously donated to charities, so, looking at the big picture, social funds entice more people to fund social causes
Social Impact Investing
Earn, spend, save, invest–these are four financial activities that are part of everyone’s life. Ideally, we aim to spend within our earnings and save the remaining. We invest all or most of our savings as per our financial plans.
Investing helps us grow financially and maintain the worth of the money we save. We look at various investment options and assess their risk and reward to achieve these objectives. A high reward is desirable, as it leads to a higher return on your investments in a shorter time, but it requires you to take risks. Eventually, you end up investing as per your risk appetite. While risk and return are the two important financial considerations, ethical considerations are also influencing investment preferences.
What is Social Investing?
Socially responsible investing, social impact investing, or simply, social investing is a form of investment where one invests in companies and funds with socially responsible business practices. Examples of such businesses include renewable energy, clean technology, environmentally sustainable businesses, etc. As a social impact investor, you may avoid investment in betting companies, alcohol and tobacco companies, or any company with a poor social and environmental record.
7 ESG Investing Trends for 2022
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ESG investing trends are not a new concept. These trends have been pulling down and hiking up the stock values of companies for years. However, ESG investing trends are expected to have significant influences on the investment market in the long run. Read through my list to find out more about these trends.
When it comes to investments, most of us look for the expected returns, right?
However, things are changing for the last few years as global awareness about climate change, sustainable environment, and responsible investing increases.
Today, more and more investors are looking into factors like environmental, social, and governance, called ESG investment. An upward trend in ESG investment is now a fact.
In the last few years, the ESG investment trends gained momentum, as sustainable investing increased by 456% from 2005 to 2020.
Simply put, there is a visible shift from traditional investment norms to more ethical, sustainable, and responsible investments. And it isn’t fading away anytime soon.
If anything, it is now moving into the mainstream instead of a side niche.
Let’s explore the top ESG investing trends for this year so you can get further insight on the subject
10 social impact startups to watch in 2022 and beyond By Patricia Allen
Social Impact: defined as that which brings about a significant, positive change that addresses a social challenge. It relates to activities and actions with a deliberate goal to positively impact the wellbeing of communities, individuals and the planet as a whole.
Social impact, social change, and movements to improve the wellbeing of society have traditionally been seen as the realm of governments, or charities and NGO’s.
However, in the last couple of years, European startups have also taken up the reins to bring about change in our societies and communities, to better the lives of everyone and better the health of the planet.
From increased awareness of the important role we all play in looking after our planet, frustration with government (in)action, to the pandemic highlighting just how much we rely on our communities, innovative technology is changing the game in social impact movements and startups are paving the way. It’s a phenomenon across sectors. The fintech, medtech, edutech, ecommerce, envirotech and social media (to name just a few) sectors have all seen a rise of startups that are underscoring social impact as foundational to business approaches and goals.
We wanted to highlight some of those startups helping society change for good. There are so many amazing startups out there that are improving the world we live in, so this is a comparatively concise list of just 10 and it goes in no particular order.
Are there any others you can think of? Let us know!
Demystifying ‘Green,’ ‘Social’ and ‘Sustainable’ Bonds
What are green, social and sustainable bonds? What is their purpose? Jonathan Gregory
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We believe that the GSS market is now firmly established as an important subset of the global bond universe, and one that is likely to maintain a very high rate of growth.
GSS bonds may offer attractive long term investment opportunities and we see an active approach is a ‘must-have’ to drive good risk adjusted returns over time.
GSS bonds have a role to play for investors looking to make hard-wired ‘impact’ allocations in their portfolios. Some features of the GSS universe mean that it is not yet ready to fully supplant more established traditional core bond allocations. But GSS bonds should be taken seriously as an active investment opportunity nonetheless.
A sound active investment approach will rotate freely across sectors and markets.
GSS and conventional bonds should be assessed in tandem and investment decisions made on the relative merits of the pricing of risk, not the label.
ESG Investing Versus Impact Investing, According To Jefferies by Austin Tannenbaum
Today, financial services firm Jefferies published a report on impact investing, detailing its similarities and differences to Environment, Social, and Governance (ESG) investing.
The report defines each term in the following way:
Traditional Impact Investing is defined as committing capital towards explicitly addressing social or environmental problems. There may also be an additional objective to generate a financial return, however its defining characteristic is investing with the deliberate intention of delivering a positive impact.
ESG Investing is largely understood to be an integrated assessment of traditional investment considerations and ESG factors in the evaluation of company or portfolio risk and return. This is historically broadly related to mitigation of downside ESG risks.
Jefferies identifies an emerging trend in which these two investment forms are synergized:
Impact investment from concept to implementation by Andrew Davey and Ann Xu
Demand for impact investing strategies is high, as investors increasingly seek to deploy their capital to address social challenges and generate a financial return. Transitioning from theory to practice is pivotal to success, write Andrew Davey and Ann Xu, of CBRE Investment Management. Sponsored comment from CBRE Investment Management.
The urgency for governments, organisations and individuals to take responsibility for tackling social inequality, injustice and environmental damage is increasing by the day. Simultaneously, investors are placing increasing emphasis upon aligning their investment values, strategies and objectives to drive positive change.
As an investment manager, our mission statement is to deliver sustainable real asset solutions that help our clients, people and communities thrive. This mission statement is closely aligned with the Global Impact Investing Network (GIIN) definition of impact investing, namely “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return”.
Impact investment is growing. Take GIIN’s 2020 Annual Impact Investor Survey which estimated that the global impact investing market had reached US$715bn.However, while this growth may be rooted in sound fundamentals, mission statements and good intentions, the question remains: how can investors be sure investments are achieving desired outcomes and taking impact investment from theory to practice?
Grave new world: global business risks in 2022
Finally, the ESG stampede. In 2022, businesses will be under pressure to intensify their activities on climate leadership and responsible citizenship, as governments cascade ESG commitments to the private sector. Investor pressure, activist shareholders, regulatory action, consumers and governments scrambling to make up for lost time on climate action are all hitting businesses hard.
“As economies being to rebound post-pandemic, the global risk agenda has diversified away from COVID-19 toward a broader range of threats,” observes Caroline Das Monfrais, a senior managing director and global resilience lead at FTI Consulting. “Surging energy prices and global energy shortages, intertwined with climate change issues, are two of the clearest challenges now facing businesses.
“Businesses are facing geopolitical disruption as a result of the devastating invasion of Ukraine,” she continues. “In addition to the tragic humanitarian cost, companies are now having to deal with significant economic disruption as well as complexity in relation to sanctions. Just before the invasion, according to our ‘Resilience Barometer’, 23 percent of G20 business leaders were worried about sanctions impacting their companies in 2022; this figure was 31 percent for Russian executives. The situation is constantly evolving, requiring agility and a greater emphasis on preparedness.”
Why is Diversity Important?
13 Top reasons Why is Diversity and Inclusion empowerment important in Business and Society?
Diversity and inclusion is important because it brings lots of benefits. Diversity empowerment is evidently to have many benefits to a diverse workplace environment. However, working is not the only activity that we perform daily, we also have our social lives, our relationships in our community. In this article, we will learn:
Why diversity is important to our society?
Why is cultural diversity is important?
Why is diversity important in school?
There are many reasons why diversity is important, before you start, it would be helpful to understand what is diversity?
Table of Contents
so really, Why is Diversity Important?
Why is Diversity Good & Important?
In the future, companies won’t have a choice. Why not start Diversity now?
How does diversity help the workplace?
FAQ on Diversity importance
Best Videos on the Importance of Diversity and Inclusion in the workplace
How to Measure Social Impact: 8 Best Practices by Natalya DeRobertis-Theye
Measuring the impact of your social good programs is a critical part of ensuring their effectiveness and helping them to grow. Here are strategies to help get it done.
Social impact is the effect that actions have on people, communities, and society. You can think of your social impact programs as an effort to create public value—ideally, in ways that are systemic, sustainable, and innovative. Another way to think of social impact is as work that serves to address a local or global community need.
Measuring social impact is important for a variety of reasons. In many instances, establishing the effectiveness of programs is crucial to secure continued funding. A track record of success can also help good ideas spread, allowing the positive change to infiltrate more communities and improve more lives. Equally important is identifying initiatives that are not performing well, so that they can be changed and improved—ensuring that the resources committed have the environmental, social, or other positive impact intended.
But how can you assess something as broad as social change? What metrics can organizations use to measure social impact? Especially given that this work looks different for every organization and initiative, there is no one-size-fits-all solution.
There are, however, proven strategies that can apply broadly to analyze and improve many types of programs. In this post, we’ll explore eight best practices for how to measure social impact