ImpactAlpha, Jan. 3 – There’s no permission required, no excuses accepted, and no better time for impact investors to step up to leadership. The pathways to climate solutions are clear, the returns on inclusion immense. To be sure, government leadership can accelerate deployment, but the case for private investment is more than compelling.
ImpactAlpha’s team of reporters and editors has counted down nearly two dozen markers of impact across our core coverage areas.
The Reconstruction in 2022
- No. 22. A bottom-up and top-down mobilization to rewrite rules, redistribute power and redress injustice can turn disruption and division into renewal and reconciliation. How do we know? Because it has happened before. On the sesquicentennial of the historical Reconstruction, “we resonate with the possibilities, and the possibility that this time the outcome will be different.”
- No. 21. The surge in Black and Brown entrepreneurship is one of the most promising trends to emerge from the COVID disruption: That makes access to working capital and growth capital not only a matter of justice, but of economic growth.
- No. 20. The ‘S,’ for social, is even bigger than the ‘E’ in ESG investing. Good jobs, affordable housing, thriving communities and wealth creation for the new majority – economic liberation for all is a mega-trend investors won’t want to miss.
- No. 19. ‘Reconstruction investing’ means capital that is flexible and appropriate, models that shift power and ownership, investors and entrepreneurs in proximity to the problem and a redefinition of risk.
Impact in Emerging Markets in 2022
- No. 18. Digitization is disrupting small biz financing in emerging markets, in a good way, expanding access to working capital & growth financing. Tech providers have the data to underwrite differently.
- No 17. Venture investors are stocking their pipelines with fintech startups delivering financial services to underbanked consumers and businesses. About $5 trillion is needed annually for informal and small businesses in emerging markets.
Climate Finance in 2022
- No. 16. Climate solutions have reached the proverbial tipping points on the way to mainstream adoption. Can they double, double and double again (and again) before the climate itself reaches its own irreversible tipping point?
- No. 15. Mega climate funds are hunting for mega opportunities. EVs and batteries were 2021’s big sectors. Look for emerging solutions in steel, cement and aviation, waste-to-energy, carbon removal, fusion and other moonshot technologies.
- No. 14. Fossil fuel-era icons are spinning out ReNewCos as sustainable standalones. ReNewCos can reap rich valuations and access to capital, while legacy OldCos can be milked for profits – while they last.
- No. 13. Carbon markets are booming. Carbon prices look set to rise further in ’22 as regulatory and PR drives corporate demand for credits and allowances beyond supply. Conservation and mitigation investments that are marginal now will be winners when carbon hits $100/ton. Fossil fuel assets and projects will be stranded.
- No. 12. Communities of color are uniquely positioned to identify and scale climate solutions. For neighborhoods that are bearing the brunt of climate change, climate-resilient infrastructure and low-carbon retrofits are a generational opportunity for health and wealth.
- No. 11. Emboldened shareholders are taking on companies around science-based climate targets, transition plans and climate lobbying, and voting against re-election of board members wed to business-as-usual.
Catalytic Capital in 2022
- No. 10. ‘Catalytic’ is becoming a badge of honor as impact investors show their stuff with high-impact dealmaking from impact bonds for women and refugees to funds to blended finance mechanisms for next-gen climate tech.
- No. 9. Wealthy families, development finance institutions, corporations and other catalytic investors can define their own expectations for risks, returns and positive impact, and reshape legacy notions of fiduciary duty.
- No. 8. Catalytic investors are deploying blended capital, guaranteed offtakes and project financing to fill gaps. Climate finance writ large is still measured in the billions, not the trillions required to avert climate catastrophe.
- No. 7. Blended finance has unlocked $160 billion for sustainable and impact investments since 2010 – not nearly enough to bridge the gap for financing the Sustainable Development Goals and avert climate catastrophe.
Capitalism Reimagined in 2022
- No. 6. That our economic system and social contract is due for a reset has become by now conventional wisdom. Reimagining capitalism requires simultaneous and diverse outside-game and inside-game interventions.
- No. 5. A ‘multi-movement engine’ can bring together workers, customers, communities and shareholders to confront corporate behavior and take on the structures of how we hold corporations accountable.
- No. 4. Systemic change requires public policy as well as private action. Agents of Impact must proactively engage with government and politics to guide business and financial decision-making toward positive impact.
- No. 3. Interventions that repair and redress past injustices, particularly against Black communities, can provide broader benefits.
- No. 2. Elevating the power (and wages) of low-income workers is good for investors, too. Impact investors are building fair gainsharing for workers into their strategies.
- No. 1. We’re all universal owners now. From major pension funds to 401(k)’s, the emerging doctrine of “universal ownership” is laying the foundation for active stewardship to mitigate systemic risks to the economic system as a whole.
What’d we miss? Send your own impact markers to [email protected].