Impact Investing in the Poor, the Next Big Thing
Monday, January 10, 2011
Over the next 10 years, investors across the world will not just be preoccupied with financial returns, but will also pay closer attention to the social, environmental and development impacts of their activities, says a report.
This will see impact investment, as this trend is known, rake in up to $667 billion in profits over the period and achieve the billing of the newest emerging asset class of the next decade, according to the report prepared by JP Morgan and Rockefeller Foundation.
It indicates that market opportunity for investment is vast, including among the poor population, who earn less than $3,000 a year.
In this category of the population, the potential for invested capital is estimated at between $400 billion and $1 trillion over the next 10 years, realising profits of between $183 billion and $667 billion.
These estimates are based on analyse conducted on selected businesses in the housing, rural water delivery, maternal health, primary education and financial services sectors for this portion of the global population.
“Impact investing will reveal itself to be one of the most powerful changes within the asset management industry in the years to come,” the report states.
This will result in more investors developing strategies where capital investments simultaneously generate both financial returns and social and environmental returns.