At the brink of a new era for education
The first in-person GIIN Investor Forum since 2019 launched another first: the impact investing market has officially crossed the $1 trillion threshold.
In his opening remarks at the Hague, GIIN CEO Amit Bouri announced to the Forum’s 1,500 attendees that the organization’s latest investor survey sized the impact investment market at $1.164 trillion. That’s an increase of over $300 billion from GIIN’s 2020 investor survey, which collected most of its data prior to the onset of the COVID-19 pandemic.
Of course, any number comes with caveats. In conversation with reporters after the announcement, Bouri detailed the delicate balance required to “scale with integrity,” avoiding greenwashing while capturing meaningful movement. Interestingly, even when pared down to only include transactions with “intentionality and measurement,” both green bonds and corporate impact investments emerged as fast-growing pools of capital deployed for impact.
That’s a good thing for continued growth. “[$1 trillion] is a threshold — in some ways it’s symbolic, a powerful signifying factor,” said Bouri. “It’s not nearly as big as it should be, but it’s big enough to pay attention to, which gives credibility for the investors we need making these types of investments.”
This growth was reflected in the content of the GIIN’s 2022 sessions. Held thirty miles south of 2019’s Amsterdam confab, the crowd of 1500 was larger than the pre-pandemic edition and attracted attendees from 67 countries. And they wanted to go beyond the case for impact and into the nitty-gritty details of what it would take to achieve the scale and integrity cited by Bouri in his announcement.
Bouri detailed the delicate balance required to “scale with integrity”, avoiding greenwashing while capturing meaningful movement.
A microcosm of this conversation: the slate of breakout sessions organized by India’s Impact Investor Council on the country’s ecosystem. India’s high rates of digital adoption among a population that includes 500 million people living on less than $300/month create a unique market for digital technologies by and for underserved communities. As a result, India’s entrepreneurial ecosystem — the third largest in the world, after the US and Israel — is one of the few that is visibly shifting away from upper-class men to entrepreneurs with lived experience of the problems that their ideas can solve. As Omidyar Network’s Roopa Kudva, put it, “they are truly impact-first entrepreneurs.”
And yet, India’s impact ecosystem faces similar hurdles to other parts of the world. Investors remain largely focused on one type of financing (equity) and a handful of sectors (namely, fintech and ecommerce). Continued growth depends on diversification across both, including more blended finance vehicles backed by government incentives and philanthropies, and more investment in “hard tech” and applied sciences.
Just as the GIIN’s data found growth outside of traditional equity investments, Harvard’s Vikram Gandhi gave a macro view on why the participation of LPs in India’s impact economy is essential. “Pensions, endowments, insurance, mutual funds, family offices, sovereign wealth funds, religious institutions — they’re all multi-generational,” he explained. “When you ask them about next quarter, they’re thinking the next 25 years. So, when they think about allocating capital to emerging markets, they can think about solving global societal issues — the risks they’re exposed to are more systemic.”
Continued growth depends on diversification…including more blended finance vehicles backed by government incentives and philanthropies, and more investment in “hard tech” and applied sciences.
The same principle applies to an expanded view of India’s technology sectors, where Satya Bansal of Blue Ashva Capital underscored the need for a more robust “lab to market” pipeline in the country. “Innovation and hiring are dying in labs,” he said.
In India and elsewhere, the next big challenge might come down to making that $1 trillion market more visible. “The downside of those big commitments is that you look around and ask, ‘why does the world still feel so unsustainable?’” Bouri observed. “Hitting the $1 trillion threshold is significant and exciting, but on that scale, it’s still very modest.”
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