Impact investing is about to become more mainstream than ever

Featured Events | Dec 17, 2018 | admin

By Michael Benigno

John Larkin, Amy Wang, and Alice Catalano shared insights on blended finance mechanics on a panel moderated by Esther Pan Sloane, head of partnerships for the United Nations Capital Development Fund.

There’s an antiquated view still held by many, that impact investing for social and environmental good is wrought with risk and financial sacrifice. The challenges are too steep, the regulations are too complex, and the targets are still moving.

But panelists at Fordham’s inaugural Impact Investment Convening, which welcomed 350 guests on December 12, showed that impact investing is well on its way toward mainstream – with less risk, better ways to surmount hurdles, and plenty of opportunity.

Blended finance projects in the United States, Canada, Netherlands, and the Nordic countries are already cited as proof that private capital could answer the problems that, historically, government couldn’t. Strategic public investments successfully lowered the barriers of entry in these global areas and have helped the private sector make sustainable investments to bring about meaningful change.

While intentions can be great, deal structure is a crucial concern.

Esther Pan Sloane, head of partnerships at the United Nations Capital Development Fund, who moderated a panel on blended finance mechanics, said that currently only seven percent of all blended finance deals involving private finance are actually reaching the poorest countries.

One East African country established a $50 million rural electrification fund, but late in the planning stage it became apparent that the way the funds had been allocated between two projects prevented any institutional investor from presenting any viable approach to reach the targeted rural areas.

Still, investors seem to be successfully driving an interest in socially responsible investing, said Peter Lupoff, MBA ’86, executive-in-residence at the Gabelli School of Business and fellow at Fordham’s Center for Research in Contemporary Finance, who organized the convening.

“What’s more is that the greatest transition in wealth is about to occur, from boomers to millennials,” Lupoff said. “They care about how their money is spent, socially and environmentally, so it makes good sense for the traditional markets to embrace this – the capital will demand it.”

Danielle Kayembe, keynote speaker, is a globally known expert on the rise of the female-driven economy.

Keynote speaker Danielle Kayembe, a thought leader on the rise of the female-driven economy and CEO and founder of GreyFire Impact, pointed out that the gender divide in consumer products and industry at large reflects a huge untapped area. Some estimates say women drive up to 85 percent of consumer spending in the United States, and, globally, women control some $36 trillion in total wealth.

As an Ariane de Rothschild fellow for 2018 and entrepreneur-in-residence at Nike, Kayembe has written about and commented on the economic invisibility of women extensively. Over two billion adults don’t have access to the financial system, and many are women, she said. She pointed out the many daily reminders women have, which seem to reinforce their invisibility: doors at office buildings designed for the tensile strength of an average man, and “hidden taxes” women pay for things like replacing cell phones that were designed for hands bigger than theirs.

“As women, almost all of the products and services that we use have been created, designed, produced, and sold to us by men,” she said.

In the context of impact investing, inequality is an indicator of latent value, she said.

“All of these pain points are actually data points that can be used to actually drive innovation,” she told those gathered. Still, the future looks bright.

The Honest Company and Thinx are two companies that have gained huge financial backing for products aimed at the underserved female market. Their success underscored the hopeful message of the Convening itself.

As Peter Lupoff put it, “As long as the enormity of capital available to invest flows toward products and services that aim for social good, investment managers will increasingly be drawn to them.”

The event was presented by the Gabelli School of Business and Fordham Graduate Net Impact, with sponsorship from the United Nations Capital Development Fund.