Revamped Team for Impact’s Trillion Dollar Challenge
UK-based non-profit evolves top-tier structure to support five-year plan to mobilise £1 trillion of impact capital.
The task of realising the Impact Investing Institute’s (III) recently unveiled five-year strategy – which sets out three core competencies to help accelerate the expansion of impact investing – will fall on experienced shoulders, albeit in new roles.
To mobilise £1 trillion (US$1.3 trillion) of new impact capital by 2029, the non-profit is changing its leadership structure to better distribute its expertise and deliver the strategy, outlined last month.
“We see impact investing as an effective way to deploy capital that drives commercial value in this century — recognising both the systemic risks to the financial system from climate change and social challenges and the economic opportunities of a global transition to net zero,” Kieron Boyle, CEO of the III, told ESG Investor.
“To achieve that, we need to accelerate the field of impact investing, both in the UK and globally, and bring in more actors – asset owners, institutional investors, and financial advisors, but also policymakers, regulators, and civic society organisations – into the field.”
III’s new leadership evolution will come into effect this October. The changes will see Boyle installed as the institute’s new Chair, with Dame Elizabeth Corley taking on the newly-created position of Chair Emerita. The role is an ambassadorial one, with Corley focusing on raising the organisation’s visibility and engaging stakeholders to enhance its impact.
The reshuffle will see Bella Landymore and Sarah Teacher become co-CEOs of the institute, moving from their current Executive Director roles.
Core competences
The three core competencies underpinning the III’s five-year strategy are innovation, implementation, and influence, which the institute said will be present across all of its future work.
The central part of the innovation pillar is the institute’s recently launched Challenge Lab. The lab looks to support private finance in better addressing societal challenges like affordable housing, preventative health, cheap, clean energy, and better-quality jobs. This entails collaboration with investors, government, and civil society actors, with the ultimate objective of mobilising £3 billion in areas that drive inclusive growth, such as place-based impact investing. The institute has also targeted the allocation of £500 billion through a just transition lens to help advance climate and environmental action.
The implementation pillar involves working with impact investing leaders to understand practices and share them in accessible ways with a wider audience. Influence, meanwhile, will see the III undertake targeted campaigns to create an enabling environment where impact investing can thrive in the UK and beyond.
In the UK, the government holds significant sway over the environment for impact investment. Boyle said the institute is “excited to see what fresh momentum a general election could bring to the vital job of working with private impact capital to help solve the big challenges a new government will face”, including delivering a just energy transition.
A key focus for the III is reform of fiduciary duty. “The common interpretation of the law around fiduciary duties still understands ‘best interests’ to be to maximise short-term financial returns,” Boyle explained. “That makes it tricky to consider the wider, sometimes longer-term, risks of systemic issues like extreme weather events, environmental degradation, and mass migration. These carry huge financial implications too.”
In February, the UK’s Financial Markets and Law Committee issued a review of pension trustees’ fiduciary duties and the extent to which they can account for climate and sustainability themes.
Just Transition Challenge
The institute has already helped stimulate increased interest in and focus on impact investing, in the UK and globally. III was a co-leader of the Group of Seven Impact Taskforce in 2021, which led to the creation of its Just Transition Finance Challenge last year.
Through the challenge, the III and partner institutions developed the Just Transition Criteria, which can be used by fund managers to design and structure investment products that deliver the three critical elements of a just transition. Those three elements are advancing climate and environmental action, improving socio-economic distribution and equity, and increasing community voice. Boyle said more than 250 organisations and individuals had so far expressed an interest in the criteria, while five investors are currently piloting it.
The criteria has been used by Just Climate’s US$1.5 billion inaugural fund which focuses on investment in hard-to-abate sectors, including cement, shipping, industrials, and land use, as well as BlueOrchard’s InsuResilience Fund.
III was also a co-founder of the Place-based Impact Investing Network, established last September to help UK local authorities and institutional investors to improve investment flows that support local economic resilience, prosperity and sustainable development.
“The integration of impact investing principles into traditional or mainstream investment practices is on the rise. Large financial institutions and asset managers are launching impact-focused products and services,” said Boyle.
Impact investing expansion
Last September, BNP Paribas’ ‘ESG Global Survey 2023’ forecast impact investing would overtake ESG integration as the most popular strategy for investors to achieve sustainability, according to 420 surveyed asset owners and managers, hedge funds and private equity firms. Fifty-four per cent of survey respondents said they expected to use impact investing in the next two years, up from 45% at the time of the survey.
In 2022, the Global Impact Investing Network estimated that the market was as large as US$1.164 trillion, marking the first time it had broken the trillion mark. According to recent estimates, the global impact investing market has passed US$3 trillion and is projected to reach US$7.78 trillion in 2033.
Part of the rationale for such predictions is increased support from policymakers and regulators around the world. In April, Japan’s Financial Services Agency finalised new guidelines on impact investing, setting out four principles for market participants to refer to when structuring and financing investment projects that have social and environmental benefits.
Last year, Brazil issued a public consultation to evolve its National Impact Economy Strategy (Enimpacto) ahead of assuming leadership of the group of 20 (G20) in 2024 and hosting COP30 in the Amazonian city of Belem in 2025. The consultation aimed to gather feedback for the macro-objectives, goals and actions of the five ‘axes’ (pillars) that make up Enimpacto’s Ten-year Plan 2023-2032.
Brazil’s impact investing focus followed in the footsteps of previous G20 leader India, with the latter’s recommendations in a sustainable finance report to strengthen impact investing including public-private partnerships. Brazil and India were named among the countries most exposed to climate impacts by research released last month by risk intelligence company Verisk Maplecroft.
“Just a few years ago, we were talking of impact investment being in the billions. It’s now in the trillions. That’s a meaningful amount on the global stage,” said Boyle. “At the same time, impact investment is still less than 1% of the world’s financial markets, so there is still a long way to go.”
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