de Schrevel: Impact Investing In 2018

Jan 30 2018 | 7:48pm ET

Editor’s note: 2018 will include a greater application of technology to impact investing and larger numbers of traditional financial institutions becoming involved with approach, according to Luxembourg-based Bamboo Capital Partners managing partner Jean-Philippe de Schrevel. That said, he continues, the large sums raised for impact investing by PE firms in recent years must now begin delivering on expectations for both financial and social returns.

Impact investing in 2018: My Opinion
by Jean-Philippe de Schrevel

Bang the drum long and loud enough and people will start to listen. This is what 2017 felt like for impact investing – not only was more capital committed to impact investment strategies (17% more in 2017 vs. 2016), there was significantly more buzz and excitement around the topic.  

Whilst there is clearly a lot more that can be done, 2017 felt like the coming of age for a sector that I have been helping shape and champion over the last twenty years. 

This positive momentum gives me cause to be optimistic that 2018 will be another positive year. But as well as this, there are two key themes that I expect will propel our sector forward in the next 12 months.

Firstly, technology. 

I am hugely optimistic about the role of technology in enabling businesses to solve age-old problems with new, innovative solutions. Technology allows new initiatives to be deployed at scale as it is often cost effective and far-reaching – this last point is particularly important when trying to reach communities with limited access to key services across energy, financial services and healthcare. 

I have seen this first hand with a number of our portfolio companies, such as BBOXX, which has already improved the lives of 500,000 people by providing clean, off-grid solar energy to households in over 35 countries. BBOXX has a remarkable technology enabling its remote monitoring of and data gathering on the systems it installs, proactive troubleshooting, efficient salesforce management, and pay as you go consumer finance.

Fundamentally, remembering that the objective is about delivering impact – socially and financially – technology can play a transformative role in increasing the scale of impact. Therefore, as I look ahead to the next 12 months, I only see technology becoming increasingly integral to the continued success of our sector.  

Secondly, I expect to see impact investing move further with corporations looking to make investments that deliver financial but also social impacts. Increasingly, corporates will see that they can access new customers and markets through impact investing, realising that financial and social returns are not exclusive. 

In this respect, one cannot ignore the recent statement by BlackRock’s Chairman and CEO Larry Fink in his annual letter to CEOs when he said: “…every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” I wholeheartedly support this sentiment and expect corporates to increasingly buy into this philosophy.    

In addition to corporates, I expect to see large traditional donor organisations question whether traditional grant making is the most effective method of generating impact at scale. Similarly, I anticipate that a greater number of NGOs will join the impact investing movement. Impact investing won’t become mainstream in 2018 yet, but it will see a broader variety of entrants. 

Whilst there is great cause for optimism this comes with a small caveat. As many larger private equity firms have announced large pools of capital for impact investment – often with great fanfare – there are now big expectations and a responsibility to deliver upon this. There is no getting away from the fact that these firms must now deliver on their promise to generate both financial and social returns. 

With some scepticism still aimed at impact investing, the success of 2017 cannot been undermined by a lack of tangible output in 2018. As always, actions speak louder than words.  

So my outlook is positive and my message is clear: 2017 was good year for impact investing, but 2018 can be exceptional. Despite being in the sector for many years, it has never been a more exciting time and I look forward to innovating further in order to deliver impact at scale both financially and socially.

Founded in 2007, impact investing specialist Bamboo Capital Partners is a private equity firm making investments in energy, healthcare and financial services opportunities globally.

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