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Impact investing: We must encourage more professionals...

Defend Truth

Opinionista

Impact investing: We must encourage more professionals to enter the exponentially growing sphere

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Motshegwa More is Impact Investing Consultant at IQbusiness South Africa. Misha Morar Joshi is Secretariat Lead of Impact Investing SA and Senior Project Manager at the UCT Graduate School of Business’s Bertha Centre for Social Innovation and Entrepreneurship.

The Global Impact Investing Network reported that impact investing management increased by more than 40 times between 2016 and 2020, from $15-billion to $715-billion. Despite the local and global uptick in this investment approach, the path to establishing a career in impact investing is anything but transparent.

As the world grows to expect more from the financial services industry, funders and recipients are being compelled to consider the broader impacts of their decisions. This has been influenced by various factors including consumers’ increased awareness. For example, 60% of millennials believe that making socially responsible investments is a critical part of one’s investment strategy, whereas only 36% of baby boomers have the same belief.

Since its inception in 2007, impact investing has grown swiftly. In 2016, the Global Impact Investing Network reported impact investing assets under management at $15-billion, increasing by more than 40 times to $715-billion in 2020.

Although the investment approach is growing globally and locally, the path to establishing a career in impact investing is less clear, especially without exposure and networks. Introducing impact investing early on into traditional finance and economics curriculums has the ability to nurture both. When correctly designed, it has the potential to conscientise learners to developmental challenges and the role of impact investing in suitable solutions and funding models. The basic principles of impact investing build on the core elements of traditional investing, integrating social analysis tools.

Individuals considering, or currently on, an impact investing career trajectory are often those who:

  • Question the broader social and environmental impacts and relevance of traditional commerce careers;
  • Have some transferable skill set, work experience or risk-taking outlook to venture into an emergent, parallel workstream;
  • Form part of networks where awareness of impact investing as a philosophy and career choice exists; and/or
  • Are self-trained, using a range of tools like online learning and MOOCs (Massive Open Online Courses).

These characteristics are the very same ones that make successful entrepreneurs and innovators — just the skills required for a growing field like impact investing, and those crucial to achieving the Sustainable Development Goals and SA’s National Development Plan.

So, how do we encourage more professionals to enter the world of impact investing?

The range of impact investing careers is broad

Careers in impact investing range from asset managers, analysts, sustainability consultants, monitoring and evaluation experts to researchers, implying an equally broad range of sought-after skills. Many emerging funds have evolved from the vanilla venture capital fund, using a diverse set of vehicles for impact, eg social impact bonds, microfinance funds, and green bond instruments. It is therefore important that potential entrants do not self-select out of the field by presuming which skills are required, particularly as the market continues to innovate.

Foster critical partnerships

Partnerships between traditional learning institutions and practising organisations in the sector can play a significant role in bridging the learning gap. This is particularly because universities are centres of research excellence and contribute to crafting the investment philosophy.

For example, research by Wharton and Cambridge with the Global Impact Investing Network was instrumental in demystifying the notion that impact investments achieve below-market financial returns. In reverse, practitioners are able to provide valuable insights to students through high-quality case studies — critical learning tools and templates in a nascent market.

Highlight advocacy and networking opportunities, both locally and globally

In South Africa, organisations like Impact Investing SA have played a significant role in knowledge building and advocacy. It has strong ties to the University of Cape Town Graduate School of Business’s Bertha Centre for Social Innovation and Entrepreneurship which specialises in convening and market building. The exposure to leaders in the field provides the much-needed networks and experiential training for a successful impact investing career.

Organisations like the Global Steering Group for Impact Investing (GSG), born out of the G7 Summit, play a significant role in driving critical conversations from the national level and sharing learnings between global peers. Events and opportunities for networking, like the GSG’s Global Impact Investing Summit for 2021 (taking place online 6-8 October 2021), provide professionals with a chance to champion South Africa as an investment destination.

Ultimately, Nobel Prize winner Dan Schechtman captured the sentiment rather well — “sustainable development requires human ingenuity. People are the most important resource.” DM

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  • “sustainable development requires human ingenuity. People are the most important resource.” Indeed. What this has to do with impact investing isn’t clear. For example, and rather unfortunately, the SHE ETF, referenced in the story about millennials making a difference has Nike as a holding. This is making an impact on women because the ETF “tracks U.S. companies that are leaders in advancing women through gender diversity on their boards of directors and in management”. Nice. Pity about the women that have to make the shoes. Impact investing appears to be about optimising social returns (and of course financial) – but without worrying too much about systems and that depress returns in the first place. Better than nothing clearly. But what if impact investing merely delays real systemic change that is needed?

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