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Giving Compass' Take:
• In this interview, Rob Kaplan argues that the challenges of the COVID-19 pandemic present an opportunity to use impact investing to build back better.
• Are you poised to take advantage of this opportunity? What can you help to build back better?
What, according to you, have been some of the major effects of the pandemic on the impact investing space?
One of the biggest effects of the pandemic is that it is creating significantly more uncertainty, which is one thing that investors really don’t like. As a result, we are seeing a pausing and slowing down of capital deployment in general. That said, my sense is that this is happening at a slower pace than what we’re seeing with traditional commercial investors, perhaps because impact investors are not only focused on money when investing; they are also committed to the impact they can create.
The current context has raised questions around the right form of capital and the right time to invest. It has also increased a lot of risks, or at least the perception of risk, particularly around investment opportunities that rely on trade and supply chains. Supply chains have been greatly disrupted, and we’re not sure when and how they will return to normal. For instance, In India, plastic recycling businesses are not seen as essential and have not been operating during COVID-19, leading to a lack of recycled raw material for other manufacturing businesses. In addition, the lockdown has also impacted the informal waste management sector, seeing fewer workers collecting and sorting waste, and being able to earn a living, resulting in limited feedstock for recycling businesses and more waste entering landfills and the environment. Both of these things have created breaks in the supply chain.
Similarly, consumer purchasing patterns and behaviours have changed and will continue to change in the coming months, and risks associated with them have become more pronounced. When it comes to industries such as healthcare, for instance, impact investors are putting in as much capital as they can right now.
While we are all thinking on how to ‘build back better’, there is a powerful opportunity to invest in deals that generate positive, measurable social and environmental impact alongside a financial return. If you are looking for a way to invest capital and also create impact, I can’t think of a more opportune moment than right now. There are good deals out there, as it is a buyer’s market, and many investors are thinking about this period as an opportunity to close deals while others are sitting on the sidelines.
Read the full interview with Rob Kaplan about impact investing during COVID-19 by Rachita Vora and Saahil Kejriwal at India Development Review.