Alpbach 2018 Financial Market Symposium: Moving beyond Goodwill – how to Create Positive Impact through Impact Investing
Vienna, September 12, 2018 - Impact investing is about putting money into institutions and organizations dedicated to the goal of responding adequately to the vast social and environmental problems and challenges we are facing today. In principle, this sounds like a good plan – however, the crucial question is: how can the impact of these investments be measured? This was one of the critical issues put up for discussion during the Financial Market Symposium at the European Forum Alpbach on August 30/31. 42 internationally renowned financial experts gathered there to share their views on how to establish rules and codes for a strong, sustainable and reliable impact investing strategy and discuss their experiences and insights in working groups and plenary sessions.
The participants of the symposium were a mixed group of representatives of asset managing companies, foundations and philanthropic institutions, development and other banks, NGOs and human rights organizations, intermediaries and consultants, impact investors, as well as persons with relevant experience from a variety of other fields. There was general consensus among the participants that this symposium constituted an important step towards transparency and sustainability. Also, it was agreed that the fundamental impact investing-related issues that were identified in the course of this Alpbach retreat require continual monitoring and critical assessment. After all, the joint work on establishing globally valid criteria for impact investing has only just begun.
One of the high-level speaker sessions that took place within the framework of the Financial Market Symposium was labelled “The real Impact of Investing” – with representatives of national banks and international stakeholders from the field of impact investing in attendance.
Elizabeth CORLEY: Former Chief Executive Officer, now Senior Advisor, Allianz Global Investors and Chair, Implementation Taskforce, London
Martin GRÜLL: Chief Financial Officer, Raiffeisen Bank International AG, Vienna
Harish HANDE: Chief Executive Officer, SELCO Foundation, Bangalore
Susan MYERS: Senior Vice President, United Nations Foundation, New York
Woody TASCH: Chairman, Slow Money Institute, Boulder
Cliff PRIOR: Chief Executive Officer, Big Society Capital, London
All speakers were agreed that impact investing was “no longer a niche,” but an expanding field with considerable growth potential. It was estimated that impact investing had the capacity of easily generating a two billion U.S. dollar market within the next decade, thus amounting to about one percent of globally managed assets. Susan Myers of the UN Foundation emphasized the greatest advantage of impact investing was its potential of advancing the UN Sustainable Development Goals (SDGs) and the Agenda 2030 by directing substantial capital into organizations that champion social and ecological goals. For this promise to be fulfilled, however, it was necessary to establish joint principles of impact investing that would ensure this investment form actually has the desired effect.
To achieve this, a few important questions were identified by the discussion panel that investors should ask and answer before going into impact investing: Where am I as an investor? What are my intentions? How do I wish to create change?
From this exchange of views, a few principles emerged that all participants considered important if impact investing is to become a major economic force:
- the need to provide clarity, transparency, and accountability;
- bearing in mind the end user’s perspective to ensure investments generate an optimal result and the risk of unintentional negative effects is minimized. This means investments should always have the focus on the no-expendable income and needs of the beneficiaries. In addition, connected with this imperative, is
- the willingness to define value in terms of the language of the community/persons receiving the value;
- having patience with the investments – impact investing requires a long-term strategy and willingness to wait for the profit
- taking adequate measures to avoid the risk of “money running too fast” – as Austrian banker Martin Grüll pointed out in reference to the bank crisis of 2008. In this context, he called upon the large banks to accept their social responsibility and implement policies that avoid such systemic risks from happening.
In addition to these principles, all participants were agreed that impact investing requires taking a holistic approach and should be guided by the goal of “creating more value than you extract.” Also, impact investing requires the collaboration of different stakeholders – from the financial sector, development cooperation, social institutions as well as human rights associations and similar. The organizations that participated in the retreat were requested to define clearly and unambiguously their role in this investment field. At the same time, they should commit to minimizing negative consequences of their actions and reporting on their investment activities according to recognized impact investing standards.
Organizers: European Forum Alpbach Foundation - Big Society Capital - BMW Foundation Herbert Quandt - CHI Impact Capital - Global Steering Group for Impact Investment (GSG) - Oxfam US; with support from BMW Foundation Herbert Quandt, Wallace Global Fund, Open Society Foundations und Vodafone Institute for Society and Communication.
For the "Alpbach Declaration on Impact Investing" and more information about the Financial Market Symposium, go to www.alpbach.org
For an insightful article in Forbes on impact investing, go to:
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