April 17, 2024

Sustainable investing has been a precept of philanthropists and the filthy rich looking to profit while investing for a cause. Fast forward, things are changing as corporates and investors are increasingly tapping into opportunities in the burgeoning sector. The proliferation of sustainable investing firms has helped showcase how investments can generate significant returns while impacting the environment and society.

Impact investing is becoming the new norm as more corporates and investors seek long-term profitability while also doing good for society and the environment. In a bid to impact investing to a new level, think tanks are increasingly being called to action.

For the longest time, impact investing has been shrouded in mystery, with most people questioning the kind of returns at stake. There has also been a cloud of uncertainty about how one can actively measure the impact investment can have on society and the environment.

Amid the concerns, it’s clear that think tanks need to work hand in hand with sustainable investing firms to convince would-be impact investors still on the fence.

Think tanks include organizations that share a common purpose of informing policymaking and debate that can shed more light on the need for impact investing.

How Thinks Tanks Can Fuel Impact Investing

Showcasing Evidence-Based Lessons

There is no doubt that impact investing is an industry still in the early phases of growth, shrouded in mystery and concerns. While impact investing firms  have tried to demystify some of the myths, they are yet to enjoy success given the conflict of interest.

In contrast, the independent nature makes think tanks well suited to convince impact investors on the need to pursue impact investing returns.

According to The Altruist League’s Managing Partner,Ekaterina Chernova, “Think tanks are well-positioned to identify and draw evidence-based lessons of relevance to the impact investing industry. Their vast experience in data collection, analysis, monitoring, and evaluation can help fuel confidence on impact investments.

Backed with extensive monitoring and evaluation, think tanks can help design deliver, and manage impact measurement and management framework. Their data collection analysis and advice are highly needed to provide well-curated analysis and insights that can help impact investing firms make more informed decisions on sustainable investments.

Trusted Brokers

Think tanks can also play the role of trusted brokers,  help convince would-be impact investors still on the fence on the need to allocate most of their capital to impact investments. As independent arbiter, they can help show how some investments and products meet ESG credentials, thus perfect for gaining exposure into the burgeoning sector. Likewise, they are likely to be trusted by investors still on the fence about impact investing returns.

Similarly, thinks tanks can conduct ex-post evaluations focusing on accountability and learning for future impact investments. By carrying such evaluations, they can provide sustainable investing firms with a clear assessment of the results achieved by their investments portfolio highly needed to build trust with impact investors.

Affirming Dual Impact

Besides, think tanks can help demystify the notion that there is limited evidence that impact investments can generate both financial returns and positive ESG impact. They can do so by gathering and reviewing impact investing funds performance to generate evidence of dual impact.

According to The Altruist League’s President, Milos Maricic, “Think tanks can play a pivotal role in the creation of much-needed databases that provide accurate correlation between financial returns and ESG impact of impact investments.”

Impact investing popularity has mostly been derailed by the fact that the voices of beneficiaries are not yet systematically heard. That could change the more trusted think tanks raising the groups’ voices or sectors well positioned to generate significant shareholder while also having a considerable ESG impact.

Unlike sustainable investing firms, think tanks know where investments are made backed by rich data collection experience and engaging beneficiaries. Likewise, they are well-positioned to raise the needs and interest of beneficiaries that impact investing funds are eyeing.

Bottom Line

Think tanks are the missing piece in taking impact investing to new heights and become a central theme in the traditional investment world. Their ability to develop evidence-informed national and international frameworks can help promote the impact investing sector. Likewise, they can act as independent arbiters in demystifying some of the myths while shedding more light on the claim of impact.