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

Thursday, February 28, 2019

By Suzette Viviers and Stephen McCallum

There’s no doubt that the world faces tremendous challenges. There is enough food in our world to feed the hungry – but it’s not evenly distributed. There’s sufficient medicine available to treat a number of dread diseases – but this often doesn’t reach those who need it. There are innovative ways to supply water and generate energy – but they cost money.

It’s clear that governments alone cannot fix these problems. The private sector has a critical role to play, too. However, generating financial returns from investments in social and environmental projects can at times be difficult, but impact investments have provided competitive returns. And the private sector, by its nature, wants to make money.

Impact investing has been posited as a possible solution to this conundrum. It’s defined as an approach where the investors’ goal is to create a measurable social or environmental impact while generating financial return. A prime example of an impact investment that has achieved both the motives is the International Finance for Immunisation Fund. This fund was established in 2006 to finance immunisations in the world’s 70 poorest countries. With support from the Gates Foundation, 213 million children have been immunised, preventing more than 3.4 million premature deaths.

Photo courtesy of John Hogg.