Impact investing and philanthropy. What prevents the meaningful deployment of capital?

In a world increasingly attuned to the long-term impact of both economic and social benefits, the spectrum of sustainable deployment of capital has shifted from traditional investments aimed at purely financial gain at one end to traditional investments aimed at purely financial gain at the other. has bridged some of the gaps between pure philanthropy and the edge of philanthropy. . However, this continued evolution comes with complications. As discussed at the recent Verbier Summit, numerous questions from participants continued to center around this theme, with enthusiasm, concern, and skepticism still remaining among investors. has become clear.

The summit will feature several sessions on how to fill the multitrillion-dollar funding gap in capital needed for sustainable solutions, the role of impact investing and philanthropy, current challenges, and tips for moving forward. discussion was encouraged. Panel participants included Jostein Urne, co-founder and head of impact at Oslo Family Office; Ms. Nava Masia, her CEO of ME Links and her UHNW her family’s advisor on sustainable private equity investments. The strategy of Kostis Tselenis, managing partner of the Swiss Impact Office, an impact and sustainability investment boutique in Zurich, and the ALIPH Foundation, a cultural heritage expert and archaeologist working at the intersection of climate change and cultural heritage. Director Bastian Valtosikos. Other impact and sustainability heavyweights were also in attendance at the event, including Damian Payatakis, Head of Sustainable and Impact Investing at Barclays.

It goes without saying that he had a lot of deep knowledge and experience in events and on stage. As such, the live questions asked by the audience were equally insightful, especially when it comes to understanding perspectives on impact investing.

The session began with a temperature check question. Have individuals invested in what they perceive as “impact” investments?Three-quarters of respondents said they have made impact or purpose-driven investments . The second question was posed to the audience about what they thought were the main challenges. Almost half of respondents felt that perceptions about financial returns were a major hurdle to impact investing, followed by a lack of measurement data.

I still have many questions

Questions arose about the effectiveness of current impact investing and philanthropic models. Some of the criticism was subtle. It highlights that staggering trillions of dollars in subsidies for fossil fuels will continue to endanger the planet. This could be rolled out more broadly, similar to how the EU is introducing green taxonomies, SFDR, etc. to avoid risks related to ‘impact washing’ and quantify real-world consequences. , highlighting the critical need for a transparent and robust impact measurement framework. .

More investors are turning to impact measurement to avoid asset retention. Viewing this as a risk management tool could bring renewed interest to the sector.

Our questions further explored the synergies between philanthropy and impact investing, asking for examples of the two coming together to address social challenges. This research highlights the increasing recognition of the complementary role that philanthropy and investment can play, particularly in leveraging philanthropic funds to de-risk investments and promote social ventures. I’m emphasizing it. But questions remain about the scale of private donations compared to the overwhelming influence of public and institutional finance, and they often perpetuate problems with the very impacts that investments seek to ameliorate. .

Family office investments highlighted a trend toward more thematic deployments of capital to address systemic challenges. This type of development further supports the idea of ​​incorporating philanthropy into a blended finance-style approach, using philanthropic capital to reduce investment risk and direct greater capital into impact ventures. You can bring out the flow.

Share your story using mainstream media

The discussion inevitably returns to the issue of perception management. Given the pervasive misconceptions and skepticism about the effectiveness and returns of impact investing, could harnessing the storytelling power of media serve as a powerful tool to reshape narratives and increase transparency? ?The proposal to involve major mainstream organizations such as the BBC in disseminating best practices and clarifying the landscape of impact investing is an innovative approach that has the potential to close the information gap and generate further public support for impact measurement.? is proposed.

The enthusiasm for impact investing and philanthropy is undeniable, but so is the complexity of implementing it. The myriad questions that have emerged from recent discussions highlight our collective quest for clarity, effectiveness, and transparency. As the sector evolves, the responsibility for fostering an environment where impact investing is not only valued but celebrated for its dual benefits lies with all stakeholders, including investors, philanthropists, financial institutions and the media. It is imposed on those involved. Bridging the gap between intent and impact requires a concerted effort to debunk misconceptions, elevate success stories, and ultimately pave the way for a more sustainable and equitable future.