LEVERAGING IMPACT CAPITAL FOR SHARED PROSPERITY
A CHALLENGE FOR ECONOMIC DEVELOPMENT PROFESSIONALS
Mary Delahunty
I ’ m interested in the movement of money , I ’ m not sure when it began – I desperately hope I was not too young for this interest to be considered precocious ! As the financial world ushers in the age of impact capital - investments that generate both financial returns and positive societal outcomes , I ’ ve seen so many interesting small-scale approaches that move money behind good intentions .
The Global Impact Investing Network ( GIIN ) estimated last year that the size of the worldwide impact investing market had grown to be worth USD 1.164 trillion .
There is no doubt that the movement of money behind impactful initiatives will change lives , but how do we ensure it changes systems for authentic impact ? Desmond Tutu would challenge us to change our focus from pulling people out of the river and go upstream to stop them falling in .
We need to take an impact lens to our current practices and resist the urge to sit impact initiatives as an appendix , an afterthought – or worse , something bright and shiny to distract from making no change to the allocation of capital at all .
As the 21st century battles increasingly complex global challenges , ranging from inequality and poverty to climate change and beyond , impact capital can serve as an instrumental tool in mitigating these issues while stimulating economic development .
The convergence of public interests and market-based solutions , when designed intentionally and delivered at scale has the potential to create genuine shared prosperity .
THE NEW PROVIDERS OF IMPACT CAPITAL Driven by societal demand and evolving market dynamics , major financial players , including international pension and superannuation funds , are increasingly integrating impact initiatives into their investment strategies .
Pension funds , given their large asset bases and long-term investment horizons , are uniquely positioned to drive the impact investing space . Recognising this potential , many have started to allocate portions of their portfolios to investments beyond robust environmental , social , and governance ( ESG ) profiles and towards direct impact initiatives .
A prominent example is the Dutch pension fund ABP , one of the world ’ s largest with more than 450 billion euros under
ECONOMIC DEVELOPMENT JOURNAL VOL 16 NO 2 2023 11