The purpose of finance is to connect those that have to those that need.”
-Jingdong Hua, Treasurer and Vice-President of the World Bank Group

The growing impact investment market is providing capital to address the world’s most pressing challenges, such as sustainable agriculture, renewable energy, conservation, microfinance, and affordable basic services including housing, healthcare and education.

Increasingly, impact investing benefits the public’s perception of a company. When a firm is socially conscious, suppliers are often happier to do business with them. Employees are more engaged, productive and less likely to leave. Customers value them and are more  loyal.

Most of us know about green bonds, which aim to protect the environment by financing environmentally sound and sustainable projects. But nowadays, companies have many more options for impact investment. These include:

• Investing in education to help solve learning, literacy and numeracy problems in low-income countries. According to a recent Financial Times report, “Unesco estimates a shortfall of $150bn a year to achieve the UN’s Sustainable Development Goal of offering every child a quality education by 2030.”
• The pandemic and budgetary pressure on countries have led to innovative financing schemes such as the International Finance Facility for Immunisation (IFFI) bonds, which help plug the vaccine-funding gap in poorer nations. The IFFI issued a $500m vaccine bond last October and a $750m one this April.
• Seraphim Space Investment Trust is the first UK-listed investment trust dedicated to space ventures.  It was set up to raise £180m to invest in early-stage companies working to profit from the rush into space. Far from just billionaires’ playthings, new space exploration projects will have spin-off benefits for agricultural and sustainability research.

Share of AUM in impact investments worldwide in 2019, by investment sector

Source: Statista.com

A company can only achieve greatness if its purpose, culture and brand are in sync”-Joan Amble, former finance chief at American Express and now a board member at Zurich Insurance

PR firms should  encourage clients to engage in impact investing /ESG, and to make it very clear to the public what they are doing, to boost brand building.

It is crucial to have a marketing and communications strategy to achieve objectives such as:

• Clearly articulating the company’s philosophy and how impact investing is core to its mission.
• Articulating the investment and social returns that impact investing can and has generated.
• Demonstrating the financial and social benefits of the company’s impact investment activities.
• Positioning the company and executives as thought leaders in the impact space.
• Increasing interaction with current and potential investors. This can help measure the impact of a particular investment.

According to the US SIF Foundation’s 2020 report on US sustainable and impact investing trends, one of every three dollars under professional management in the United States—$17.1 trillion—was managed in accordance with sustainability metrics.

Businesses that fail to consider such metrics can experience a significant financial downside. A study by MSCI Inc, a global provider of financial and portfolio analysis tools, found that companies with high ESG scores experienced lower costs of capital, lower equity costs, and lower debt costs compared to companies with poor ESG scores.

Climate change has been a big driver of this growth, with environmental accountability rising exponentially in recent years. There has been tremendous pressure on the energy sector to adapt to a new reality, for instance. Clean power, decarbonization, and distributed power have become big factors behind investment.

Experts at McKinsey have cited more than 2,000 academic studies which concluded that better ESG scores translate to about a 10% lower cost of capital. There are also  lower regulatory, environmental, and litigation risks associated with high ESG-scoring companies.

Impact investing is far more than mere window dressing—it is a strategic imperative.

Impact investing is an investment strategy that aims to generate specific social or environmental benefits, as well as financial gains. One of the primary goals is to reduce the negative consequences of economic activity, so impact investing is sometimes regarded as an extension of philanthropy.

Curzon PR is a London-based PR firm working with clients globally. If you have any questions, please feel free to contact our Business Development Team [email protected]