Predictions for impact investing in 2019

2018 was the year impact investing started to reach a much wider audience in the investment world. It went from the occasional mention in the media in previous years to a torrent of speeches, events, announcements and even billboard advertising campaigns, particularly from big financial services companies. It all kicked off when Larry Fink (CEO of Blackrock, the world’s biggest asset manager) used his annual letter in January to say that in the future they would take social purpose into account in the companies they invest in.

Less policy, more practice

This might be overly optimistic, but I think 2019 could be the year that the words and policies begin to translate into practice. I’d like to see some of the financial services giants start to make real investments and be able to say how much capital they’ve put to work to make the world a better place. It needs to be more than impact wash though and live up to the definition:

“Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”

Charities get their houses in order

I hope that more big charities and foundations get behind the idea of 100% impact investment portfolios for their endowments. It’s shocking to me that we often ignore the impact of what a charity does with the money in its endowment but looks at every detail of the money that it gives away. It just doesn’t make sense. It’s possible that many large charities are doing more damage with their money by investing it in oil, tobacco, arms, gambling and so on than they are doing good with the money they get back from those investments (which may well be negative this year as well!). I hope they change before we see more scandals. There are some great networks like the SIIG for charities and foundations who want to learn more and I hope we see those continue to thrive.

BCorps continue to grow

I also think the BCorps movement will continue to grow in 2019. It’s just common sense. The framework the B Impact Assessment gives is excellent and the community of business that have certified gets better and better. I think in 2019 we’ll continue to see BCorps getting investment and be acquired by larger companies, which will attract more good companies to the community.

Growing pains

Unfortunately, I think the impact investing sector is now getting to a scale where there will be a big scandal at some point. My guess is that it will come from the world of very rich people dabbling in impact investing through vehicles they’ve set up themselves. The attitude has been wrong there for a while. Will it be a Bad Blood style unwinding of the story of a large impact venture or fund? I’m not sure. I should stress that I have no inside information — this is just a hunch. It will be interesting to see how the sector responds to intense scrutiny.

Don’t forget who this is for

2019 will almost certainly be a year when the world needs impact investing more than ever. If Brexit happens it will disproportionately hurt people who are already hurting. Climate change seems to be even worse than we thought and will affect poorer people more severely. We absolutely need to ramp up impact investing to tackle inequality and try to halt the damage we’re doing to the environment as soon as we possibly can.

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