Steering impact investing toward a 2020 tipping point



On the heels of the G20 meeting in Hamburg will come a summit of the Impact 16 in Chicago. That’s the number of countries, with the recent addition of Finland and Argentina, that have formed national advisory boards to accelerate the practice of impact investing.

The awkwardly named Global Social Impact Investment Steering Group, or GSG, is the closest thing to a United Nations for the movement to integrate social and environmental impact into the risk/reward calculations of financial decision-making. It is an outgrowth of the (then) G8 task force on impact investing, established in 2013 under the UK’s leadership, and the 2014 report, “The Invisible Heart of Markets.” In addition to the original seven countries (excluding Russia but including Australia and the European Union), the GSG now includes Brazil, India, Mexico, Israel and Portugal, which hosted last year’s summit.

The Chicago gathering July 10–11 will showcase both large foundations, such as MacArthur and Ford, committed to impact investing, as well as the rising class of venture-capital and private-equity funds that are investing with an explicit impact thesis and commitment to measurement. Fund managers such as Leapfrog Investments, DBL Partners and Bridges Ventures, along with the brash newcomer TPG’s Rise Fund, will testify to the investment opportunities in growth markets, economic inclusion and environmental sustainability.

Sir Ronald Cohen, the legendary British venture capitalist who chairs the steering group, is expected to predict a 2020 “tipping point” for the movement, when global impact assets under management are expected to reach $300 billion, double this year’s assets of approximately $150 billion.

Sir Ronnie, as he’s known, is a champion of social impact bonds, in which private investors risk capital to finance proven social interventions (addressing, for example, prison recidivism, homelessness or asthma) and are paid back via government savings if the programs are successful. But such pay-for-success deals have so far been tiny, compared to more straightforward efforts, by funds such as Leapfrog’s or TPG’s, to back firms serving emerging middle-class consumers in growth markets around the world, or DBL’s success in backing U.S. companies such as Tesla, Solar City and Revolution Foods.

The U.S. entity, now known as the US Impact Investing Alliance, scored some impressive policy wins in the last few years as it pressed for IRS, Treasury and Labor Department guidance on foundation mission-related investments and pension fund fiduciary duty, among other issues. Those policy changes helped pave the way for the decision by trustees of the Ford Foundation to direct $1 billion of its $12 billion endowment toward mission-related investments. Ford’s president, Darren Walker, will keynote the summit.

Other speakers at the event include MacArthur’s president, Julia Stasch; TPG Rise’s Bill McGlashan; DBL’s Nancy Pfund; Generation Capital’s David Blood; and Morgan Stanley’s Hilary Irby. I’ll be leading a panel on the role of investment advisors in impact investing with Goldman Sachs’ John Goldstein, U.S. Trust’s Jackie VanderBrug and Caprock Group’s Matthew Weatherley-White.

ImpactAlpha partnered with the Global Steering Group to manage the GSG Honors award competition, which attracted more than 150 entries from asset owners, asset managers, entrepreneurs and intermediaries. The winners of those honors will be announced Monday and presented with their awards in Chicago. The Aspen Network of Development Entrepreneurs ran a similar process to honor three millennial impact entrepreneurs.

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