Impact investing: achieving a positive balancing act in challenging times
The award for investment acronym of the past year must go to ‘SDGs’, the United Nation’s Sustainable Development Goals.
The award for investment acronym of the past year must go to ‘SDGs’, the United Nation’s Sustainable Development Goals. The 17 SDGs are part of the 2030 Agenda for Sustainable Development that was agreed by world leaders to mobilise efforts to end poverty, fight inequality and to protect and preserve the natural environment.
We believe that targeted impact investments can help answer this call.
As an active practitioner in impact investing since 2013, we have seen substantial market growth over the past five years, creating a deeper and broader opportunity set.
Evidenced in the Global Impact Investing Network’s 2018 annual impact investor survey, this growth has partially been achieved by expanding into regions, sectors and asset classes that have historically been less popular.
And with ever more long-term investors looking to balance the double objective of creating positive social and environmental impacts, and financial returns, we see impact investing increasingly entering the mainstream.
As today we face societal and environmental challenges of a scale and urgency that require ambitious collective action, we believe this rapid expansion and development is set to continue, and indeed accelerate, in 2019 and beyond.
However, the growing demand for, and broader understanding of, the benefits of impact investment solutions, while encouraging new providers, may also present some risks – in particular, the risk of ‘impact washing’. That is, some actors may adopt the label without meaningful fidelity to real impact.
True impact Investing solutions focus on financing businesses and projects that are designed to have intentional, positive, measurable and sustainable impacts on society and the environment while simultaneously delivering financial market returns.
While there are 17 SDGs to target, some present deeper and more tangible opportunity pools than others, with greater potential for concrete, measurable outcomes. Healthcare & wellbeing, climate change and financial inclusion are a few examples, we believe, of scalable investable themes for those that are committed to an investment agenda focused on achieving the SDGs.
As we look ahead we see long-term investors demanding more sophisticated, scalable product offerings from experienced operators. The positive balancing act requires both the ability to seek out innovative projects that promote sustainability and address neglected areas and new financing models that steer capital towards them.
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales No: 01431068. Registered Office: 7 Newgate Street, London EC1A 7NX. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
AXA Investment Managers - 2019