As policy support weakens, where can impact investors find durable sources of demand?
We are living through a ‘rupture in the world order’, said Canada’s prime minister, Mark Carney, in a speech at the World Economic Forum earlier this year.
Perceived self-interests now take priority over global interests and ‘the very architecture of collective problem solving [is] under threat.’
Governments are increasingly focused on domestic priorities, from energy security and industrial competitiveness to fiscal constraints, while multilateral institutions face growing pressure.
As a result, aid budgets have come under pressure, even as the funding required to address global development challenges remains substantial.
For impact investors, this marks an important shift. Environmental and social challenges are arguably growing in urgency, but policy support can no longer be assumed and financing is in retreat.
Against this backdrop, the case for impact investing increasingly depends on balancing profit with purpose.
Successful impact investing must deliver financial returns alongside intentional, positive and measurable environmental or social outcomes.
In today’s environment, success requires a focus on businesses that can realise attractive returns on capital, without relying on regulatory tailwinds.
Rather than weakening the case for impact investing, a less supportive political backdrop may strengthen investment discipline.
Investors are being forced to focus more closely on commercial fundamentals, competitive advantages and enduring sources of demand.
Search Panacea’s library of insight, technical commentary and adviser resources to quickly find guidance on client and regulatory questions.