Impact Capital Partners was founded with the goal of connecting institutional investors with impact investments. To simplify the process, we created our proprietary ImpactBrowser™ so that institutional investors can find and choose impact opportunities that match their needs.
When it comes to choosing values-based investments, it’s important that investors understand the differences between SRI, ESG and Impact Investing. Impact Investing is among the newest terms, coined by the Rockefeller Foundation in 2007. It is used to describe investments that generate a measurable, beneficial social or environmental impact alongside a financial return. However, this form of investing is often confused with Socially Responsible Investing (SRI) or ESG. To understand the differences, let’s take a step back and look at the evolution of these concepts.
The United Nations Framework Convention on Climate Change (UNFCCC) enacted the Paris Agreement in 2016 in response to the growing challenges of climate change. The agreement aims to limit the increase of global temperatures to 1.5 °C (2.7 °F) above pre-industrial levels. However, it’s projected that current pledges are not ambitious enough to limit global temperature rise to 1.5°C or even 2°C. Countries need to strengthen their commitments quickly enough to achieve the Paris Agreement targets.
Small and medium-sized enterprises (SMEs) account for 90% of global businesses and are responsible for 7 out of 10 job opportunities in developing countries. However, 44% of SMEs are financially constrained and underserved by traditional finance institutions. Public and private sectors must work together to develop solutions to meet the growing demand for finance. While governments have the responsibility to improve market-enabling policies, the unmet demand presents an opportunity for financial institutions to engage.