Key takeaways on impact investing from this conference include:
1. There is acute need for impact investments – which explicitly targets both financial and development returns. The SDG financing gap is estimated at 2.5 trillion/year. We need to go from 'millions' and 'billions' to 'trillions,' despite COVID-19
2. There is substantial liquidity in the market – the key is to adjust the risk appetite for 'impact investment.' To attract funds and validate expectations, it is crucial to credibly demonstrate results. Measuring impact has thus become the focus of increasing attention.
3. There is growing evidence that impact investments which yield high development outcomes can also be 'good deals.' Financial returns and development returns are not incompatible and often can go hand in hand. To be sustainable, investments targeting development returns must also be financially profitable. A new class of investors has developed who care much more, and primarily, about societal impact (jobs, access to electricity or health care, empowerment etc.)
4. Performance is increasingly measured on both financial and developmental dimensions. There is growing momentum towards some harmonization of standards and principles, more demand for understandable and comparable data on performance, and more benchmarks. There is tremendous need for impact investment. The SDG financing gap is estimated at 2.5 trillion per year.
5. There are multiple types of impacts (economic, social, environmental etc.), some positive and some negative, on different types of beneficiaries and with different time horizons. Reaching a synthetic view on ultimate impact implies weighing and value judgments to allow for comparison and aggregation. The sustainability of these impacts also requires in-depth analysis.
6. In terms of measuring impact of a private sector investment, panelists have emphasized the need to rely on data, whether already available or having to be collected. Some argued that data are abundant, others mentioned that even when they exist, they are not necessarily accessible. Serious, research based impact studies need first to focus on the objectives of measurement (the 'what' and the 'why'), which requires interactions with the company whose impact is evaluated. Evaluative approaches should not be defined by a preference about methods (the so-called 'tyranny of methods'). Rather, the method needs to be chosen in view of the availability of data, the time available, the nature of the project being investigated. Qualitative and quantitative methods are complementary rather than opposed. Familiarity with the local context and building trust with the local comp. The conference helped push the frontiers from discussing how best to assess development impacts (and this is important), to think collectively about how impact measurement can be used to increase development impact (across portfolios), across sectors and across the world.