Impact investing: the compelling case of combining profits with purpose

Today's crucial global challenges can be tackled while maintaining performance in line with both financial and impact expectations.

What is impact investing?

Investments in companies, organizations, and funds with the intention to generate both financial return and positive social and/or environmental impacts that are actively measured.

Intentionality of impact and measurement of impact are two of the requirements for an investment to be labeled as an "impact investment".

In today’s capital markets, there is a broad universe of investors who seek to do good or avoid harm. These range from those who negatively screen for ESG risks, to those who seek positive social, economic, and environmental impacts across their portfolios.

There is a compelling case for impact investing: doing well by doing good.

Why impact investing matters

Investors increasingly recognize the need to avoid negative effects and to follow international norms and principles designed to address Environmental, Social and Governance (ESG) risks. Some investors avoid investments in specific industries that they see as causing harm - for example, tobacco and gambling.

Impact investing goes well beyond avoiding harm and managing ESG risks. It aims to harness the power of investing to do good for society by choosing and managing investments to generate positive impact while also avoiding harm.

Leveraging the private sector to meet the United Nations’ Sustainable Development Goals (SDGs)

According to the United Nations Conference on Trade and Development (UNCTAD), around $5 to 7 trillion USD are needed to achieve the SDGs by 2030. This means financial resources are needed at scale from both public and private players.

The SDGs have different targets such as reducing poverty, increasing gender equality and providing access to clean and affordable energy. Impact investors are looking to identify and invest in companies and projects tackling these same targets.

The inherent sustainability of impact investing

Impact Economy is a form of a free market economic system that embraces financial and economic activities (production, consumption, and trade of goods and services) carried out with the purpose of both generating profits and having a positive impact for society (people) and the environment (planet).

Participants in the Impact Economy manage by measuring the impact that their activities have on their main stakeholders and the environment. They work to prevent negative impacts and optimize positive ones.

An Impact Economy is both sustainable in social and environmental terms and value creating in financial terms.

We believe that the private sector has a fundamental role in becoming a strong catalyst in achieving social improvement. Only through Innovation, Risk-taking, and Scale can we achieve our purpose of doing good by doing well. Impact creates a new paradigm of risk-return-impact.

Impact investing in Africa

In 2018 only 14% of the $502 bn channeled to impact investing were allocated to (Southern African Development Community) SADC. The region shows many opportunities and investors are prepared to include them in their portfolio, however there is a need to properly structure the opportunities in order to tackle investors’ requirements.

Combining profits with purpose

When a business is genuinely impact-conscious, it is more appealing to consumers and investors, better-positioned to tap into latent demand. This will boost profits and lower long-term financial risk since it makes companies more sustainable.

Impact can be measured and compared, we are committed to using the best standards the market has to offer, albeit making the necessary adjustments with the available data in order to operate in the most productive manner possible and achieve the best results.

Kairos’s purpose is aligned with the pursuit of the following SDGs

  • People

  • Women

  • Africa

  • Competencies and Talent

  • Knowledge

  • Fairness and Sustainability

Kairos is at the
forefront of the shift in the paradigm

We target companies and people that can be changed by our action, introducing metrics and knowledge to leverage people’s lives. We bring money to projects that are financially and socially viable and that are aligned with our purpose.

Learn more about our action

Our team combines unique expertise in a wide range of countries and sectors that are applied to structuring and measuring financial and social returns. Impact needs to be measured and compared, and we apply the combination of our own methodology with the best standards in practice.

Meet the Kairos team