One-third of all those who moved out of poverty in Latin America over the past decade will likely slide back. That’s 30 million people. Another 200 million are considered vulnerable.
Traditional solutions to address societal challenges – led by governments, international organizations and non-profits – are important, but by themselves they won’t be enough, especially if we are to meet the ambitious Sustainable Development Goals (SDGs).
So who or what can bridge the gap? The private sector.
The private sector has always played a small part in tackling the region’s challenges, but not at enough scale. This is likely to change as more asset owners, asset managers and corporations in the region embrace impact investing – investments made into companies, organizations and funds with the intention of generating social and environmental impact as well as a financial return.
Impact investors work in sectors such as sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services including housing, healthcare, and education. These investments are being made in both emerging and developed markets, and are targeting a wide range of returns – from market rate (or above) to below market rate, depending on the investors’ strategic goals. A 2016 survey reported over $77 billion in impact investment assets under management, with the intention to increase annual capital committed by 16% in the following year.
Of course, as worthy as these goals sound, what most decisions-makers in the C-suite want to know is: does it make financial sense? The data we have so far suggests it does.