Impact investing is a relatively new concept and its proponents are trying to create a movement that in some ways they believe would be a market solution to the world’s ills. It is extremely attractive to people who are not particularly altruistic, but know that social change is imperative for our survival. Included in this would be goods and services for the poor including micro-credit, investment in new energy technology so that we don’t warm up as fast as predicted, and of course creating jobs to alleviate poverty. The idea should be about dragging hard-nosed capitalists out of their sole focus on financial return into recognising that business has responsibilities because it affects the planet.
Since the invention of the internet, the public can see bad business practice such as deforestation, child labour and smokestacks. Corporate reputations can be ruined in minutes by social media.Hence the awareness of the need to build social capital and to appear to be good corporate citizens. Impact investing is, therefore, a way for business people who are really only interested in financial returns to grow their social capital while growing market capital.
Can impact investing then fall within the philanthropic sector as this is where the philanthro-capitalists are trying to position the concept?