Enabling infrastructure for impact investing begins to emerge

The blended value proposition of social impact investing – financial, social and environmental – resonates with most people. While they may not be racing out to transfer all their assets out of mainstream investments into the expanding universe of social impact investing, they are genuinely curious to learn where the opportunities arise and how they may engage. The task of learning about opportunities has however been challenging given the non-existence of a consolidated database of opportunities available to potential investors. Investors needed to undertake the laborious task of identifying and researching opportunities one by one.

Over the past few months we have however started to see progress being made on this front with the beta testing of ImpactBase launched in February and, more recently, the announcement of the ImpactAssets 50 (IA 50). ImpactBase is an online database of impact investment funds detailing more than 100 funds searchable by various filters including impact theme, asset class, target geography and target return. IA 50 is a list of 50 impact fund managers selected against a set of criteria to ensure the list included firms with experience, scale in terms of AUM and investor-base, commitment to impact, and represented a range of approaches, asset classes, and impact areas.

Ngapartji-Ngapartji Investment Fund managed by Ecosystems Investment Management is the only Australian fund to be found in ImpactBase. No Australian fund can be founded within the IA 50 which is not surprising given the incompatibility of the nascent stage of development of the market for impact investing in Australia with the selection criteria for the IA 50. I would hope to see this position change over time as impact investment funds in Australia are launched and build track record.

Initiatives such as ImpactBase and IA 50 are part of the required enabling infrastructure necessary to effectively build a marketplace for impact investing as written about in Investing for Social and Environmental Impact: A Design for Catalyzing an Emerging Industry by Monitor Institute. While initiatives to increase the visibility of impact investing opportunities and, in turn, provide potential investors basic orientation of the landscape are valuable, data sets will ultimately need to increase in sophistication to enable comprehensive benchmarking between funds.

As I head out on vacation for a couple of weeks I am looking forward to using a few long flights to dive into Social Innovation, Inc by Jason Saul, CEO and founder of Mission Measurement LLC and a member of faculty at Northwestern University's Kellogg School of Management. It has received very good reviews and its overarching message of business being part of the solution to many social ills facing the world is a theme that is increasingly gaining traction as philanthropists, mainstream business, investors and government all look for new ways of creating social and financial value.