Impact at work: An examination of corporate impact investing strategies and their durability
The report examines the durability of corporate impact investing strategies in advancing positive social, economic, and environmental outcomes while remaining financially sound. It explores impact themes, capital sources and risk-return strategies of corporates. The report concludes with recommendations to build and maintain impact investing programs over the long term.
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OVERVIEW
The report examines how corporations are leveraging their balance sheets and investment capital to advance positive social, economic, and environmental outcomes alongside financial considerations. The study explores strategies deployed by Fortune 1000 companies, categorised by impact themes, asset classes, and risk-return profiles. The US Impact Investing Alliance aims to encourage corporations to initiate impact investing programs and catalyse a lasting corporate impact investing movement.
Brief landscape of corporate impact engagement
The report highlights the evolution of corporate impact engagement and the move away from purely philanthropic activities to strategies more in line with business objectives. The report notes that corporate impact investing programs encompass community investing strategies and the leveraging of corporate treasury dollars for impact, making them novel and an opportunity for a more holistic and long-term corporate impact investing movement. The report also highlights progress in the development of impact metrics, measurement tools, benchmarks and rankings, which have encouraged corporate commitments to impact.
Assembling a corporate impact investing strategy
The report argues that corporate impact investing strategies can vary significantly. The main impact themes addressed in the report are: diversity, equity, and inclusion; community economic development; financial inclusion; future of work; and climate/sustainability. The report also highlights the risk-return profiles of corporate impact investing programs and how capital preservation, risk-adjusted, and risk-taking profiles influence such programs.
Pathway to durability
The report notes that building durable impact investing programs requires committed corporate leadership and board support, and investment expertise within formalised teams. The report also highlights the importance of establishing an accountability strategy to keep impacted stakeholders informed of the corporate’s impact investing initiatives. The report emphasises that impact investing requires discipline to create positive outcomes, meet internal measures of success, and increase the likelihood of becoming a more integrated activity within the business over the long term.
Recommendations
Lastly, the report concludes with specific recommendations for the corporates seeking to establish or enhance durable impact investing strategies. The recommendations include identifying champions in the C-suite to lead impact investing internal or external, prioritizing investment expertise, establishing an accountability strategy to keep stakeholders informed, and defining impact and financial goals. The report recommends launching smaller scale efforts to generate learnings early on, adapting, and building on those initiatives in the future.