More and more investors are looking to impact investing, seeking long-term profitability while not only ‘doing no harm’ but ‘doing good’.
The impact investment industry is already worth more than USD 700 billion.
The industry’s claims of impact are likely to attract more investment; as well as the attention of the broader research and policy community.
With this, however, comes the risk of ‘impact washing’ (claiming impact with no evidence to support such claims). Indeed, in the 2020 Global Impact Investing Network (GIIN) Annual Impact Survey, 66% of impact investors said impact washing is the greatest challenge the industry will face over the next five years.
And so, as this movement grows and the private sector increases its explicit role in matters of public interest, new actors need to engage to avoid impact washing and ensure that the industry develops on the basis of sound evidence.
We propose that local think tanks are well-positioned to help nurture this young industry to grow in a sustainable manner, and to deliver impact by:
- Contributing to the development of evidence-informed national and international frameworks to promote an impact investing sector that can effectively plan for, measure and account for impact
- Complementing and strengthening the investment industry’s knowledge, skills and capacities
- Developing and adapting appropriate impact measurement methods and tools
- Acting as independent arbiters to the industry’s claim of impact
- Promoting a culture of ongoing learning about the sector.
Local think tanks are national or sub-national organisations close to the investments and their stakeholders. They possess a wealth of sectorial and contextual knowledge that is critical to inform, ex-ante, investment decisions and can contribute to ensure that individual investments and portfolios are continuously informed by the best available evidence. To find a local think tank visit the Open Think Tank Directory
OTT is working with partners, IMPACTO Consulting and the International Development Research Center (IDRC) to develop an initiative to promote to participation and involvement of local think tanks in the field.
Read our concept note summary here
Read about our project with IDRC here