6. Road Map: Next Steps for Mainstreaming Impact Investing
In many ways, more is “known” about the successful execution of an impact investing strategy today than in years past. Clearly, diverse practices and actors are coming together under a banner of impact – and now, each stakeholder community has work to do. The path to success is not guaranteed, however. Table 5 below offers a road map of the actions that should be considered by various actors with the potential to influence the development of impact investing and traditional finance in the next years. While these are currently discrete stakeholder groups and strategies, they will combine in the future to advance a single, integrated approach to investing capital for financial returns and impact.
Table 5: Road Map for Mainstreaming Impact Investing
|Impact Investment Fund Managers|
|Development Finance Institutions|
|Asset Owners and Family Offices|
These steps forward are all elements for advancing impact investing over the years to come.
Impact investing gathers together many aspects of traditional financial practices combined with a variety of community, development and environmental finance strategies. The numerous impact investing practices of the past are becoming the common, integrated investing practice of the future.
Diverse financial strategies may be applied to advance social and environmental value creation, while at the same time, social and environmental factors may be seen to impact the ability of traditional investment strategies to generate financial returns.
Traditional investors are recognizing that unrealized, “off-balance-sheet” liabilities represent a real threat to their ability to make a simple financial return. By not considering such factors as global climate change, pandemics and educational levels of national workforces, investors are placing their portfolios at risk. However, by engaging with stakeholders in addressing those factors, they are advancing their own interests and those of society.
The awareness of the power of managing portfolios for total performance – for financial returns woven with social and environmental impacts – is bringing not only new capital to market, but advancing a new vision of investing to generate sustained and blended value.