Will Impact Investing Take Off?
Thursday, July 18, 2013
By Randall Kempner
I live on airplanes – typically hopping from one impact investing conference to another. So, if you will forgive the aviation analogy, I believe the impact investing sector is clearly moving down the runway. It is gaining momentum as more mainstream investment shops like JP Morgan and Deutsche Bank develop products and global convening organizations like the World Economic Forum and the Clinton Global Initiative embrace and promote the concept. Yet, in my view the sector has not attained sufficient v-speed for lift off. It is still facing significant headwinds, including the lack of track-record of existing fund managers, difficulty in finding investable deals, and uncertainty about how to effectively and efficiently measure impact once the investments are made.
At the Aspen Network of Development Entrepreneurs (ANDE), we’ve been spending a lot of time exploring this last challenge. ANDE is a global network of organizations that propel small business entrepreneurship in emerging markets, with the ultimate goal of reducing poverty. We believe that measuring the financial, social, and environmental impacts of these small and growing businesses (SGBs) will demonstrate their ability to drive prosperity creation and will lead to increased investment flows. We knowhow hard it is to develop and implement transparent, consistent and high quality metrics when you are dealing with millions of small, geographically dispersed businesses.
As our members invest money and resources in SGBs and help entrepreneurs grow their businesses, ANDE works with them to assess the economic, social, and environmental impact of their work. In June, we hosted about 120 people at our offices in Washington, DC to reflect on our progress and discuss the challenges that we still face in measuring impact. Four years ago, in 2009, we hosted the first such conference – and we’ve come a long way since then. But it became clear from this conversation that we still have much work to do.
After two days of intense discussion, I came away from ANDE’s Metrics Conference with a new perspective on impact assessment and on the future of the SGB movement.