Thursday, March 28, 2013

Impact investing set for growth

Impact investing has come a long way in a relatively short period of time, but it could take 10 to 15 years to fully develop the market, according to the authors of a report on the subject. 

Edward Jackson, a faculty member at the School of Public Policy and Administration at Carleton University and Karim Harji, a co-founder and partner at Purpose Capital, spoke in Ottawa this week at an impact investing seminar sponsored by Aga Khan Foundation Canada. 

“This is a long game – it’s going to take time to build the field,” Jackson said, adding that impact investing is small, dynamic and growing, and opens the door to other forms of innovative financing.

Impact investing will not replace development aid, and it’s no excuse for governments to ignore their obligations, Jackson said.

“Entrepreneurs want to integrate social considerations but it’s not easy,” Harji said. ”This is going to take time, and higher levels of leadership.”

At the retail level, there’s currently little opportunity for investors to align their capital directly with a cause, Harji noted. He expects that to change in the long term. Investors should not be overly concerned about the risks of impact investing, Harji said, stating that the perception of risk is much higher than the actual risk.

Last year, Jackson and Harji co-authored an extensive report on impact investing for the Rockefeller Foundation, noting that the field is in the market-building phase, and should evolve to capture the value of the marketplace in 5 to 10 years, with the entrance of mainstream players.

“Much progress has been made in building the field of impact investing globally,” the report says. “Many tangible gains have been achieved. And there is still much to be done. To be sure, building an effective global industry is a long-term, complex and difficult task. However, this is precisely the time for the leaders of the impact investing field to recommit to building a fully developed marketplace.”


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