Impact investment is the new buzzword that is gaining a lot of attention from investors. In Europe and UK there is a growing awareness about impact investment. There has been some path breaking work on impact investment that has already taken place in US. But still you will find people asking you what impact investment is? Impact Investment according to the definition of Global Impact Investors Network (GIIN) is investment that is done with the aim of generating positive and measurable social and environmental impact along with making financial profits. The term was first coined by the Rockefeller Foundation in 2008. Many business consultancy services in India are now promoting impact investment to investors investing in new businesses.
Impact investment examples
With many environmental challenges and irreversible damages being faced by the world, there is a major shift that is taking place in businesses. Blackrock, the world’s largest investment firm that is managing over $6 trillion assets is now telling companies to take up societal responsibilities and become impact investors. The CEO of Blackrock, Larry Fink in his annual letter has mentioned that society is now demanding public and private companies to serve social purpose. Over time it will be imperative for all companies to think about societal needs along with financial return.
UBS too has become an impact investor with launch of their first impact fund of funds. This fund raised $51 million in 2015. A record amount of $471 million was raised in 2016 for an impact fund that invests in cancer research initiatives and turns them into commercially viable businesses. UBS has promised to invest at least $5 billion of private client assets to Sustainable Development Goal related impact investing.
Impact investment examples
With many environmental challenges and irreversible damages being faced by the world, there is a major shift that is taking place in businesses. Blackrock, the world’s largest investment firm that is managing over $6 trillion assets is now telling companies to take up societal responsibilities and become impact investors. The CEO of Blackrock, Larry Fink in his annual letter has mentioned that society is now demanding public and private companies to serve social purpose. Over time it will be imperative for all companies to think about societal needs along with financial return.
UBS too has become an impact investor with launch of their first impact fund of funds. This fund raised $51 million in 2015. A record amount of $471 million was raised in 2016 for an impact fund that invests in cancer research initiatives and turns them into commercially viable businesses. UBS has promised to invest at least $5 billion of private client assets to Sustainable Development Goal related impact investing.
A Roadmap for India
While the infrastructural challenges in India may seem like a matter of concern to many, to impact investors from M&A consulting firms in India these challenges may seem like opportunities. Globally India has been seen in the forefront of Global Impact Investing Movement. Brilliant entrepreneurs are seeking opportunities to come up with innovative ideas and are collaborating with foreign investors who are establishing a branch in India that are working with local talents.
All over the world, 193 governments have pledged to sustainable development goals that will free the world of hunger, poverty and inequity. There are some trends that are being noticed in the impact investment sector in India:
- India has been the global leader in impact investor mobilising capital. But most of this capital has been from global investors. Recently business consultancy services in India are seen to be looking at investing in impactful businesses, setting a new trend.
- The government of India, in the recent past has focused a lot on startups. The impact investment industry has seen to be making quite a mark on the M&A consulting firms in India where this entrepreneurial nation is not only pooling in capital support from the government, but is also making sure that there is a positive implementation of the same.
- India indeed is coming up with solutions for the impact investing needs in the world. It is anticipated that Indian fund managers and impact entrepreneurs will soon build impact businesses that will impact global problems.
Conclusion
The current times in India is going to be a watershed period for impact investing not only in India, but also for the world. Some of the impact startups in India have had great successes attracting the much needed global attention. India is indeed in the limelight for impact investing because this vast nation seems to facing almost all the social and environmental challenges that different parts of the world are facing in silos. As the issues faced by India are complex, the solutions found by the entrepreneurs are also innovative and diverse. It is this innovation, coupled with government support and foreign investment that is making India the hotbed for impact investment movement.
Sources:
http://www.forbesindia.com/blog/economy-policy/2019-a-roadmap-for-impact-investment-in-india/
https://www.forbes.com/sites/jpdallmann/2018/12/31/impact-investing-just-a-trend-or-the-best-strategy-to-help-save-our-world/#15869e5d75d1
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