The Rockefeller Foundation coined the term “impact investing” in 2007 to describe private investments that generate a financial return alongside social or environmental impact. At the time, the idea wasn’t new; it just didn’t have a name.
And, more importantly, there wasn’t a cohesive strategy or infrastructure to support the development of a variety of investment products. There also wasn’t a large base of investors ready and willing to buy these investments if they did exist.
More than 10 years later, impact investing may not be mainstream, but it’s getting there, with at least $228 billion in invested assets mostly in private markets, according to the Global Impact Investing Network’s latest figures. When the definition is broadened to include public funds seeking to invest in companies with the best environmental, social, and governance, or ESG, practices, the level of assets swells to nearly $9 trillion, according to the latest figures from The Forum for Sustainable and Responsible Investment.
Yet leaders of the impact-investing movement are hardly resting on their laurels. They are thinking hard about how to push the market forward while being more effective at ending or alleviating intractable global problems, from clean water to poverty.
When Amit Bouri, CEO of the Global Impact Investing Network, or GIIN, was a researcher at the Monitor Institute in 2008, working on a project backed by the Rockefeller Foundation to figure out how to put impact investing into action, Jed Emerson and Karl “Charly” Kleissner were two of the pioneering individuals he reached out to for their expertise and experience.
Today, Emerson, a provocative thought leader for the movement, is re-examining what he calls the “purpose of capital,” finding that practitioners are too focused on impact investing as a new type of financial investment and aren’t paying enough attention to creating real social change, environmental sustainability, and a better economy overall.