Impact investment provides beings to the social sector to address the world’s most pressing challenges in the sector, such as sustainable agriculture, renewable energy conservation, microfinance and education. With the intention to generate positive social and environmental impact, the impact investment market is steadily growing and has sized up to a market worth USD 715 billion.
Q.How CSR and impact investing go hand in hand and how to really look at this space? How should Corporates be looking at impact investing and one of the different ways that CSR can be used in a creative manner.?
Ans. Just to set the context, right, Just pick up a data point from the SDG test report which says that India stands at 117 position currently on the SDG parameters. And, you know, together both, the private and the public sector in 1920 could invest only about $1 billion for the year. Which talks about the need for impact investment as a tool and a very important instrument here. How SDG’s a space also is. You know, I think all the companies in respect of their size and the quantum of money that they have in this is CSR kitties is always having some sort of limitations. And I think impact investment gives us that opportunity and opens more options for blended finance and through various instruments that can amplify the impact. And you can actually create much more scalable solutions with quantifiable outcomes. So I think when we look at, you know, projects which are mostly overlapping in the CSR ecosystem that we see everybody’s doing it. Most of the companies are now shifting to digital telemedicine or health care programmes and stuff like that. I think there is a larger need that how can a more collaborative model be built-in through innovative finance models like impact financing and where the public sector can also put in money to create a larger exponential impact. So this is how I see this as a great opportunity.
Q. Do CSR practitioners and people who manage CSR budgets how should they really be looking at what’s happening in the impact space? Where is the ecosystem act and what are some of the key regulatory issues and where do they stand?
Ans. They’re probably five areas that come to mind in terms of bottlenecks or areas that really specifically need attention when it comes to catalyzing this space of impact investing. The first is, you know, just when we talk about blended finance in India. Been talking about this term for years. It’s been around forever. We pride ourselves on saying that you know it is about financing. Capital can really come in and derisk again and de-risk for commercial capital and so on and really catalyze financing in the process. But for all of that talk of blended financing in India, really, the amount of lending that’s taking place is very limited. There is just not as much taking place. A lot of it has to do with regulatory inhibitors is to the process that I’m sure others we talk about is the preventively mixing of different forms of capital, where it’s a philanthropic, charitable funds with the return-seeking capital. So that, in itself is is an area that requires more attention.
Q. What is it that needs to take place in terms of legislation? Because a lot of these issues are not to do with changing the law per say but in many cases to do with Just providing a clarification?
Ans. So is something because something is not explicitly not committed, but it isn’t permitted either. So where does the law really stand and no one wants to get into this blended finance transaction and then into a justified three years in it to tax authorities or other regulators. So that is certainly one area.