By Liz Sessler.
If this past year has shown us anything, it’s that the world is seeking change–and is looking for it in places they’ve never looked before. Although the current political, economic, and social climate brings with it tremendous uncertainty, it also presents an incredible opportunity for the impact investing community as people actively seek to alter the status quo.
This thirst for real, systemic change has already taken root in the minds of many investors. From January through August of 2016, investors added more than $1.2 billion to socially responsible funds, and total assets in these funds increased a remarkable 56% to total $170.1 billion from the same time period in 2012, according to Morningstar. This growth is being fueled in large part by women and millennials, both of whom have made their intentions to align their money with their values very clear. And we should be listening. While various studies cite different timelines and amounts, most agree that the intergenerational wealth transfer expected over the next four decades will accrue mainly to women and millennials.
Impact investing is a logical next step for these and other purpose-driven investors. Yet the impact investing community, that we should expect to be a major beneficiary of this emerging wealth, has only just begun to put the technology and infrastructure in place and provide the necessary transparency that will attract and accommodate these investors.
Providing the same level of access and information readily available in the traditional capital markets may be even more critical for the impact investing space in achieving scale. We as an industry have seen that when people understand that they can invest directly in mission-driven institutions working to address the issues that mean the most to them, they will act. Yet many people remain unaware of impact investing, and those who already participate still find it difficult to source appropriate investments. The impact investing community must embrace and harness technology to raise awareness and provide the access that can capture this potential movement of capital.
None of us— individuals, institutions, or corporations—can afford to be passive actors in the face of the pervasive and profound challenges we face here and abroad. Climate change, rising housing and healthcare costs, educational inequity, the need for prison reform, and much more, cannot be adequately addressed by governments alone. It is the obligation of every individual and institution of conscience to leverage their resources to build the world they want to live in and leave for future generations.
Bellwether institutions in the financial services, foundation, and endowment communities must support this movement in order to maintain momentum. While a number of foundations have pledged to begin aligning their endowments with their missions, and several well-recognized endowments have divested from fossil fuels, we need more institutional players deploying capital through impact investing.
The cry for change being heard around the world is what we in the impact investing industry have to reach out and embrace. Technology and change are great friends to impact investing if we build a path forward. Let’s see this opportunity for what it is: a chance to shift the culture of capital to also be a culture of caring.
See one example of technology and impact investing working together at www.impactusmarketplace.com.