The term “impact investing” has been making the rounds in recent months. Just last week the Clinton Global Initiative announced the launch of Global Impact 50, an index of the top 50 impact investment fund managers delivering financial returns while creating social and environmental value. It is estimated that the potential market for impact investing is over $120 billion. With increased visibility on the global scale, impact investing has piqued the interest of traditional investors who have been battered by the financial crisis and for whom the prospect of earning reasonable returns while doing good is looking more and more attractive. While some have raised concerns about the number of viable investment targets and the feasibility of successful exits, there is no doubt that this is a growing sector that is driving capital to business that tackle social and environmental problems in efficient and effective ways.
It is in this spirit that the Social Capital Markets Conference 2010 kicks off next week in San Francisco. Now in its third year, SoCap “convenes the major players and emerging thought leaders in the field to expand (the market)” and bring impact investing “into the mainstream.” The theme of this year’s conference is “What’s Next?” Through seven tracks – Impact Investing, Tactical Philanthropy, International Innovations, Mobile Technology, Food Systems, New Money, and Metrics/Systems Thinking – participants will have the opportunity to explore what is going on in the field currently and how social entrepreneurs, funders, investors and innovators can unlock this potential $120 billion market.
I will be covering the conference starting next Monday and I invite your comments and suggestions on the topics and issues you would like to hear about. What are some of the more promising signs in the field? What are some of the biggest barriers to bringing impact investing into the mainstream? It seems that one might be clarifying just what impact investing is and what it isn’t. Unlike socially-responsible investing, impact investing isn’t based on negatively or positively screened investments. And unlike patient capital, it doesn’t imply that investors need to accept below market returns in exchange for creating value. Instead, impact investing (neatly summarized in this Monitor Institute report) is based on the idea that market-rate returns can be generated on all three fronts when capital is driven towards companies that pursue market-based solutions to social and environmental problems.
Vale is a second year MBA student at Duke University’s Fuqua School of Business and is interested in how for-profit businesses are finding innovative ways to create social and environmental value and how capital is being driven towards those businesses. Prior to enrolling at Fuqua she was the Deputy Director at Empowerment Group, a non-profit microenterprise development organization based in Philadelphia. This summer she interned with B Lab, auditing certified B corporations and working on the organization’s policy and capital markets initiatives. Vale has a BA in Economics and Political Science from Swarthmore College.