Credit: Kai Gradert
In 2020, the Global Impact Investing Network reported that the impact investing market accounts for USD 715 billion in assets under management globally. Impact investing is here to stay.
Despite COVID-19’s economic implications, impact investors remained cautiously optimistic through 2020, and experts from Palladium Impact Capital (formerly Enclude) and Bamboo Capital Partners, Palladium’s Asset Management business, share their insights into the key trends they see unfolding in the sector in 2021.
1. Continued Focus on Gender
As many impact investors build gender-lens investing into their strategies, Palladium Impact Capital’s Kelly Robbins-Roberts predicts a broader view of gender beyond women and girls to include men, the LGBTQI community, and intersectional identities.
“We expect increasing commitments to funds with an explicit gender lens or where gender is a core area of focus,” she notes. “There’s a wider understanding among many impact investors that gender is material to COVID-19 recovery efforts, which will most likely motivate mainstreaming gender into existing vehicles and pandemic recovery initiatives.”
Robbins-Roberts adds that she expects to see much of this reflected in the GenderSmart Global Summit in February of 2021, where the most experienced gender-lens investors will be convening and at which Palladium is a sponsor and speaker.
2. Push for the Environment
Similar to gender, where climate focus was once niche in the impact investing sector, there is now a wider and growing range of strategies focussed on climate and environmental investing, especially in areas such as land use and conservation.
“Corporations have had an interest in sustainability for some time, both in response to customer demands and with a view to securing more resilient supply chains,” says Steven van Weede, head of Palladium Impact Capital.
“We anticipate more announcements of partnerships between corporations, local communities, and impact capital to drive sustainability.”
Bamboo Capital Partners’ CEO Jean-Philippe de Schrevel views the shift to a focus on climate as an inevitability of the many social movements of the day.
“The field of impact investing will continue its mainstreaming due to the combination of powerful and irreversible forces: younger generations acutely conscious of the environmental crisis and pushing for more purposeful investments.”
3. Technology Creating Inclusivity
As technology brings the world closer together, Florian Kemmerich of Bamboo Capital Partners notes that it’s also creating a more inclusive market for impact investing. Where some may see a digital divide, he sees digital inclusion.
“Impact investing is entering a dynamic growth phase of digital inclusion, which is aligning with socioeconomic development, last mile connectivity, and digital transformation. This is where true innovation happens,” he says.
According to Kemmerich, digitisation will provide impact investors with more chances to support opportunities that they normally wouldn’t be able to access.
“We are focussing our investments on access and affordability of goods and services for the low-income population,” Kemmerich continues. “Thanks to digitisation, we are able to access those markets and new opportunities. Technology is leapfrogging over economic inclusion to support hugely underserved markets and the digitisation of assets will help us invest more transparently and efficiently and democratize impact investing.”
4. Institutional Investment
As traditional financial institutions receive pressure from their clients and beneficiaries to make impact investing more accessible to private investors, van Weede expects there will be a shift to more meaningful engagement in impact from institutional investors.
“We are not suggesting that 2021 is the year when the floodgates of institutional capital will open, but we do anticipate that there will be an acceleration of the ultimate owners of the capital wanting to be a bigger part of the solution,” he notes.
He adds that providing that access to private investors will be achieved through larger investment vehicles and by making use of listed markets.
Despite the toll COVID-19 took on global economies in 2020, the team is hopeful moving into 2021 that the road to recovery to a post-pandemic impact investing world will see investors doubling down on the impact and target groups they were already focussed on, with renewed purpose and vigour.