NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, April 29, 2015

For years, a nascent movement led by passionate pioneers out to change the world has been slowly but surely taking shape. Quietly, these early fearless leaders have been championing the idea that businesses can be a tool for social good, beyond the jobs that they create. Specifically, they’ve been building the movement for a new class of investors and entrepreneurs to lock arms and build companies that provide products and services that address daunting social challenges, and generate a financial return for investors. These companies are found in many sectors, including large markets such as education, energy, transportation and healthcare that are ripe for disruption.

It’s still early days. But as I’ve observed the incredible traction and momentum in the impact investing movement over the last 12 months, at this time of year, I can’t help but be drawn to a baseball analogy. From my perspective, the impact investing movement has until recently been in spring training. As we look at how the movement has advanced particularly in the past 12 months, I do know that the regular season is now well underway – and while we may still be playing the early innings, a game is now in progress, and it has been a remarkable year of early home runs.

Major Players Moving Off The Sidelines, And Others Doubling Down

It wasn’t that long ago that the impact investing sector was seen as a small silo comprised of people and organizations who believed it was possible for investors to achieve both a financial and social return—sometimes concessionary, sometimes not. This changed in the last year as we saw entities from the traditional financial sector coming in off the bench.

We saw the world’s largest asset management firm, BlackRock, announce the launch of BlackRock Impact, a business unit dedicated to impact investing, and we saw longtime impact investor Prudential commit an additional $1 billion to socially responsible investments. Most recently, Bain Capital announced it would enter the fray, tapping former Governor Deval Patrick to lead the charge.

These firms follow JPMorgan, Goldman Sachs, Morgan Stanley and others who made earlier commitments to impact investing. These are major players representing the more traditional financial sector, and the potential scale and influence they can bring signals a new phase in the impact investing movement.

This week, I will be joined by many investing pioneers as we attend the Milken Institute Global Conference— the bastion of traditional finance and big business —where for the first time ever, an entire track has been built around impact investing. This is great news for the sector.