Even as ‘The Economist’ noted in an authoritative piece at the start of 2017 that impact investing has come of age, moving into 2018 it looks like the rise of impact investing is indeed an age-related phenomenon. Powering the growth of impact investing are the millennial youth, the freshly minted generation of the 1980s and 1990s, who are looking set to bring impact investments from the realm of ‘good-to-have’ to ‘must-have’.
Acknowledging this change that is set to sweep through the impact investment world, ‘The Economist’ noted at the close of 2017 that the young are Impact Investing’s big hope. Having grown up in a digital age, millennials are both more exposed to the world’s woes, and more likely to use electronic investment tools. It then becomes clear for all to see that a powerful force for good which uses the best of modern technology to power its growth is unstoppable indeed.
And, where else would this change commence but from the education sector – an arena that reflects societal changes even before they take root in the real world. No surprise then that this millennial magic is already visible in the field of higher education. Under pressure from their alumni, several university endowments have promised to review their investment portfolios under a ‘socially responsible’ lens. Business schools are also reporting that classes related to Environmental, Social and Governance (ESG) investments are oversubscribed. With ESG being the new mantra of the impact investment world, an increase in ESG investments invariably indicates increased uptake of impact investing as a global phenomenon.
So, what is the size of this global force for good? Global consultancy firm Deloitte estimates that, by 2020, millennials may control up to US$24trn. The vast stores of wealth at their disposal, coupled with their optimistic belief that they can ‘change the world’, means that they are set to take the world of impact investment by storm.
This is backed up by a survey in America by Morgan Stanley that is found in their “Sustainable Signals” report for 2017 which examines the findings of an impact-investing-focused survey of 1,000 active investors across the age spectrum, and is a sequel to a 2015 report on the same theme.
Morgan Stanley’s survey found that millennials have underpinned the growth of the market for impact investing. From 2015 to 2017, those who said they were very interested in impact investing grew by 10 percentage points, to 38%. The report also noted that Millennials “are twice as likely as the overall pool to invest in companies or funds that target social or environmental outcomes. A whopping 75% millennials agreed that their investments could influence climate change, compared with 58% of the overall population. They are also twice as likely as investors in general to check product packaging or invest in companies that espouse social or environmental objectives. And, like children of every generation, they influence their parents – baby boomers who have large fortunes of their own.
Meanwhile, a 2016 survey by the Toniic institute, the global action community for impact investors with members in 26 countries, showed that millennials surveyed across 6 continents were indeed interested in impact investing. While some are taking a portfolio approach, others are considering how to align their careers and their philanthropic activities with their values and impact investments.
However, they also cited various challenges in the way of playing a more active role in the impact investment space. Overall, the survey concluded that millennials need more support to realise their impact objectives. While the young generation demonstrates a thoughtful, rigorous approach to impact investing, they need more access to tailored capacity building in impact investing as well as robust investment channels across asset classes. Finally, while they currently leverage their friends and investor networks to access the right causes and companies to invest in, they also want to collaborate more with their family members and advisors.
It is clear then that the millennial generation needs more information on the impact investing space as they take crucial decisions about partnering with organisations and joining forces for social change. Impact investors that possess deep insights and access into markets that are otherwise complex to understand and tough to reach, can then make it easier for the millennial generation to maximise their impact.
GroFin is one such organisation that has pioneered impact investing in emerging economies across Sub-Saharan Africa and the Middle East & North Africa (MENA). With a unique, award winning model that provides Small and Growing Businesses (SGBs) not only with access to finance but also tailored business support, GroFin manages various funds through which millennials and other investors can participate in the challenging yet rewarding impact investment space in Africa and MENA.
With a primary focus on vital needs sectors such as education, healthcare, agribusiness, manufacturing and key services such as water, waste and energy, GroFin has achieved a high impact footprint across its 15 locations of operation. To illustrate, GroFin has supported 8,750 entrepreneurs, financed 673 SMEs, helped sustain 115,580 jobs and improved the lives of 577,905 people as at 31 December 2017.
So, partner with us and become a part of this exponential movement to change the lives of entrepreneurs and communities across Africa and MENA.