Topic
Nearly a decade after the launching of the impact investing industry by the Rockefeller Foundation and its partners, the field is growing, but it has not yet reached its full potential. The latest research by the Global Impact Investing Network shows that impact investing assets worldwide have reached the $80 billion mark and will likely soon hit $100 billion. However, the funding gap that is required to implement the 17 Sustainable Development Goals, or Global Goals, over the next 15 years is of a different order of magnitude. It is estimated that more than $2 trillion per year is required, mainly from the private sector, over and above funds provided by aid and taxes, to pay for full-scale SDG implementation.
At the same time, though, if impact investing itself is framed and structured to explicitly address specific SDG targets, such as food security, health or renewable energy, perhaps the industry can, by 2030, grow its asset base to $500 billion. This would require, in practice, creating 500 funds each $1 billion in size over the next decade and a half, or 50 funds with assets of $10 billion each. This is ambitious, but, given what is at stake globally, and the accelerating momentum for major partnerships, it is not impossible. In any case, matching impact capital with the Global Goals favours thematic or sector-oriented funds and approaches.
Moreover, from an evaluation point of view, aligning fund metrics with SDG targets and indicators is very feasible. So is holding fund managers and their investees accountable for achieving meaningful results toward SDG targets, and reporting on that performance. There is, therefore, a large and important opportunity here for the role of impact assessment as the industry gains scale over the next 15 years.
Tool
Source: E.T. Jackson and Associates Ltd. 2016
Exercise
Break into small groups, and choose a chair and a rapporteur for each. Focus on SDG 2, whose longer form is “End hunger, achieve food security and improved nutrition and promote sustainable agriculture.” How would you evaluate the success of an impact investment fund that aimed to contribute to the achievement of SDG 2? What key indicators would you use to measure results? What types of data would you collect, and what methods would you use to collect them? Write up your group’s recommendations on a flip chart. Your group’s rapporteur will be given five minutes to present your work to the plenary.
Readings
Bannick, M. and P. Goldman. Priming the Pump: The Case for a Sector-Based Approach to Impact Investing, Omidyar Network, Redwood City, 2012. etjackson.comépriming-the-pump-omidyar-network
Bouri, A. The UN’s SDGs Deliver a Capital Call to the World. Institutional Investor, September 10, 2016. https://www.institutionalinvestor.com/article/b14z9n4f6rxhn1/the-uns-sdgs-deliver-a-capital-call-to-the-world
Jackson, E. Evidence Plus: Voice, Choice and the Results that Matter Most, Presented to the Panel on Measuring and Evaluating Impact, 2016 Social Capital Markets Conference (SoCap 2016), San Francisco, September 15, 2016. https://etjackson.com/wp-content/uploads/2019/07/Evidence-Plus-Results-that-Matter-Most-Sept-2016.pdf
Global Impact Investing Network. Achieving the Sustainable Development Goals: The Role of Impact Investing, New York, 2016. https://thegiin.org/knowledge/publication/sdgs-impinv
Lucks, D., T. Schwandt, Z. Ofir, K. El-Saddik and S. D’Errico. Counting critically: SDG ‘follow-up and review’ needs interlinked indicators, monitoring and evaluation, Briefing, IIED, July 2016. http://pubs.iied.org/17363IIED/?s=IIEDBRIEF
Ofir, Z. Evaluation in the SDG Era: Lessons we ignore at our peril, Evaluation for Development, March 21, 2016. http://zendaofir.com/evaluation-in-the-sdg-era/
Rayner, C. S. A Tale of Two African Agricultural Funds, Bertha Centre for Social Innovation and Entrepreneurship, Graduate School of Business, University of Cape Town, 2015. etjackson.com/Evaluating-Agricultural-Funds-Case
Schwandt, T., Z. Ofir, D. Lucks, K. El-Saddick and S. D’Errico. Evaluation: a crucial ingredient for SDG success, Briefing, IIED, April 2016. http://pubs.iied.org/17357IIED/?s=IIEDBRIEF
Sonen Capital. 2015 Annual Impact Report: Lessons from the Field, Sonen Capital, San Francisco, 2016. http://www.sonencapital.com/thought-leadership-posts/2015-annual-impact-report/
United Nations. Sustainable Development Goals, New York, 2015. http://www.un.org/sustainabledevelopment/