Private Capital Leveraging Impact Investing Momentum
It’s almost ten years since the Rockafeller Foundation coined the term ‘impact investing’. The concept quickly became popular with foundations and high-net-worth individuals (HNWI) keen to align financial returns with social reward. It now seems impact investing is moving beyond a ‘trending topic’ to something more permanent.
In early 2015 the world’s largest asset manager, Blackrock, threw its weight behind impact investing, later followed by Europe’s largest pension fund, ABP, who in October issued their new responsible investment policy. ABP almost doubled their allocation to ‘high sustainability investments’ to 58 billion euros by 2020. Soon other pension funds followed together with insurers and banks. Insurers like AXA and Zurich have jumped on the bandwagon along with many banks, including the ‘biggest and the badest’, such as BNP Paribas, JP Morgan and Barlcays.
It now seems, after the non-profit sector and public sector embraced mission related investment, private capital is chipping in. Private capital has long been criticized for dealing with their direct impact, but to little with the indirect impact their investments are making. Perhaps this is a move for the good, yet while the mobilization of private capital for mission-related investment is good, we really need to see to what extend their ambitions are actually realized and not just plain old greenwashing. In that respect the proof remains in the pudding.