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Investing to impact a post-COVID world

Over two years into a pandemic that has led to prolonged lockdowns, economic uncertainty and laid bare the limitations of every country’s healthcare infrastructure, we’re seeing people from various walks of life reflecting on the same issues: how can we build back better, more inclusively and respond collectively to global challenges?

As the impact of the pandemic is felt across society, we’re seeing the need for every stakeholder to be responsible, whether it is governments, businesses and individuals.

COVID-19 has made a vast majority of the population think about their long-term plan.

Investors too are focused on creating positive change,- and now more than ever, they’ve embraced impact investing. Of course, impact funds have financial return expectations to meet, but in addition, set goals for environmental and societal change. Zarmeen Parvi of the Global Impact Investing Network explains, “Investors now want to ‘intentionally’ manage their impact and understand their impact footprint. From institutional investors to retail mum and dad investors, they want to see how their investment creates ‘real-world outcomes’ that are positive for people and the planet. 

Despite the global economic consequences of the pandemic, impact investing has thrived, as per The Global Impact Investing Network (GIIN), the market size of impact investing in 2020 increased to over $700 billion from $500 billion in 2018. 

The increase of the impact investing market is remarkable but more must be expected – on the corporate front, environmental, social and governance (ESG) is here to stay and has made its way to the top of the board and C-suite priorities in 2021. Ever since ESG has come into the mainstream, the challenges to understand and quantify its true impact has been brought into focus. As British impact investor and philanthropist, Nick Maughan, reflects: ‘We must improve the effectiveness and credibility of impact investing by establishing more rigorous systems for measuring and quantifying a company’s “impact”.’

Organizations have now started working toward implementing frameworks and guidelines – much like financial audit structures – to placate the demand for more transparency and accountability from investors, consumers and employees.

The pandemic has played a role in heightening the demand for companies to be accountable to their stakeholders. 

On an individual level, we’re witnessing millennial and Gen Z’ers entering the fray, these generations are more progressive on social issues and they recognize the importance of a collective effort toward global challenges. As investors, these generations bring different expectations regarding sustainability, diversity, gender equality and ethics, and are looking to support companies and leaderships that are focused on creating long-term impact.

Gen Z is slated to mature into influential stakeholders who will shape the next decade.

As more investors look to create impact by contributing to global recovery and sustainability initiatives, they are seeking data to quantify the impact generated by their investments. We are now witnessing a paradigm shift in investor expectations, Zamreen elaborates, “Investors are starting to categorise whether their investments either A – Avoids harm, B – Benefits people or Planet or C – how does their investment contribute to solutions that address real wicked global problems, ie. the ABC’s of investing has changed and the conscious investor is now well and truly awake!“

Going forward, the priority must be on empowering the stakeholders with access to the right kind of information, to help them make better decisions and form greater impact. 

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