In a world increasingly attuned to the long-term impacts of both financial and societal returns, the spectrum of sustainable deployment of capital has filled several gaps between traditional investing purely for financial gain on the one end of the spectrum and pure philanthropy on the other end. However, this continuing evolution comes with complexities. As discussed at the recent Verbier Summit, numerous questions from the attendees continue to orbit the topic, revealing both enthusiasm, concerns and still a hint of skepticism among investors.

The summit facilitated several discussions on how to close the trillion-dollar funding gap of capital needed for sustainable solutions, including a session about the role of Impact Investing & Philanthropy, the current challenges, and tips on how to move forward. Panel participants included Jostein Urne, a co-founder and the head of Impact at Oslo Family Office; Naava Mashiah, CEO at ME Links, an advisor to UHNW Families on sustainable private equity investments; Kostis Tselenis, Managing partner at Swiss Impact Office, an impact and sustainability investment boutique in Zurich and Bastien Varoutsikos, a cultural heritage expert and archaeologist, and the director of strategy at the ALIPH Foundation that works at the intersection of climate change and cultural heritage. Other impact & sustainability heavyweights were also at the event, including Damian Payiatakis, Head of Sustainable and Impact Investing at Barclays.

Needless to say, there was plenty of deep knowledge and experience at the event and on the stage; for that reason, the live questions that came in from the audience were equally insightful, especially when trying to understand perspectives around impact investing.

The session kicked off with a temperature check question: have individuals invested in what they perceive as “impact” investments? Three-quarters of the responses indicated that they have made investments that they view as impact- or purpose-driven. A second question was posed to the audience about what they thought the main challenges were. Almost half of the respondents felt that perceptions around financial returns was a significant hurdle for impact investments, followed closely by the lack of measurement data.

Still Plenty Of Questions

Questions arose about the effectiveness of current impact investing and philanthropy models. Some of the critique wasn’t subtle; highlighting the staggering trillions of dollars in subsidies for fossil fuels that as it stands will continue to compromise our planet. This brings to the fore the critical need for transparent and robust impact measurement frameworks that can potentially be deployed more widely—just as the EU is doing with the green taxonomy, SFDR and more to avoid risks around “impactwashing” and quantify real-world outcomes.

More investors are also looking at impact measurement through the lens of wanting to avoid having stranded assets. Seeing this as a tool for managing risk could bring some fresh interest to the sector.

The questions further explored the synergies between philanthropy and impact investing, seeking examples where the two have converged to address societal challenges. This inquiry underscores a growing recognition of the complementary roles that philanthropy and investment can play, particularly in leveraging philanthropic funds to de-risk investments or catalyze social ventures. Yet, doubts linger about the scale of private contributions compared to the overwhelming influence of public and institutional finance, which often perpetuates the very issues impact investing seeks to ameliorate.

A trend was highlighted in family office investments to adopt a more thematic deployment of capital that addresses systemic challenges. This type of deployment further supports the idea of philanthropy being included in a blended finance style approach, where philanthropic capital could be utilized to mitigate investment risks and unlock greater capital flows towards impactful ventures.

Using Mainstream Media To Share Stories

The discourse inevitably circles back to the challenge of perception management. If misconceptions and skepticism about impact investing’s efficacy and returns pervade, could leveraging the media’s storytelling prowess serve as a potent tool in reshaping narratives and enhancing transparency? The suggestion to involve large mainstream entities like the BBC in disseminating success stories and clarifying the impact investment landscape proposes an innovative approach to bridging the information gap and potentially generating even more public support for impact measurements.

While the fervor around impact investing and philanthropy is undeniable, so too is the complexity of its implementation. The myriad questions emanating from the recent discussion underscore a collective quest for clarity, efficacy, and transparency. As the sector evolves, the onus falls on all stakeholders—investors, philanthropists, financial institutions, and media alike—to foster an environment where impactful investments are not only recognized but celebrated for their dual returns. Bridging the gap between intention and impact requires a concerted effort to demystify misconceptions, elevate success stories, and, ultimately, pave the way for a more sustainable and equitable future.