Increasing Triple Bottomline

We are in between the changing world. Every country, sector and individual is feeling the change. The propensity and impact may be different depending if you are the government, a business or an individual. The financial world is also changing. The product of finance has always been money and the function of finance is the exchange of value, risk and leveraging on your future. Finance as an instrument has always changed human behaviour and it’s time for the new version of capitalism.

Sustainable future and responsible finance are leading human race towards impact investing. Socially responsible investing is the new mega trend in investing, the financial crisis has knocked down greed and the younger generation millennials are seeking the change. This race wants to work and want their work to matter. Over $41 trillion is going to be transferred from the millennials to the baby boomers alone in America and this currency would seek investments which may not only pursue returns but accomplishments as well. Most portfolio managers have started looking at social impact in their investments in developed markets.

Developing countries need impact investing to provide capital for important sectors such as healthcare, energy, microfinance and education. Impact investment industry is expected to be worth $1 trillion by 2020. In India it is currently estimated to be a $7.5 billion opportunity with a potential to grow up to $18 Billion by 2020. Social entrepreneurship that was only available to the mega wealthy is now being made available to common man at large. Many Institutions, family offices, foundations, hedge funds, pension funds and PE funds have started to look at the triple bottom line – financial, social and environmental. Many believe it is possible for businesses to sustain economic returns along with positive social and environmental change. In India about $2 billion has been invested in more than 50 funds in more than 300 social enterprises.

Need Of New Mindset Since these investment options are yet not matured and not easily available they have to be accessed at an early stage for investment. It is an art and science knit together however many mathematical minds of finance may still only perceive it to be a crazy investment idea. However it’s time that finance is changing the social fabric and investors are fascinated to invest in green - real estate, energy & energy conservation, food - farm to table, nutrition, healthy lifestyle living etc. Soon it will lead to a policy shift and this would trickle down to every individuals mindset change. Though there are technology developments happening across sectors but an intersection of finance, technology and trust would only encourage a movement of change.

It has been said many a times that it will never happen and will never be accomplished, it has never been achieved and is reckless and naive, it would never work and is irrelevant, it is a mere vision for new reality but it is happening globally and this is just a precursor to a new transformational industry. The industry is also a solution to India’s growth, job and income inequality problems. India is yet to explore its full potential for impact investment options though the government has become encouraging towards the interest of global investors to invest in social entrepreneurship. So next time your financial advisor asks you prosperity or profit, ask why not both?