Social Impact & Sustainability Investing: The New Gold Rush
What does Social Impact Investing and the early American promise of gold and fortune have in common? In 1848, the discovery of gold in California brought with it the hope of wealth and prosperity for many. The news slowly traveled throughout the western hemisphere, and those who were fortunate enough to heed the first call, were welcomed by gold nugget’s that could be plucked right out of the ground. It was said that in 6 month’s a man could make a 6 years pay in the early days of the gold rush. As news spread of good fortune, by 1849 overwhelming numbers of “49’rs” from all over the world had descended upon the California landscape infected with “gold fever”. The rush was good to those who heeded the initial call, however those who were among the last often returned home with little more than what they set out with. In 2014, the new gold rush is unequivocally Social Impact and Sustainability Investment, and the new “49r’s” are social entrepreneurs and social impact investors.
In 2013, the United Kingdom hosted the worlds G8 Summit, comprised of eight of the world’s leading industrial nations, which annually meet with the purpose of discussing global issues such as economic growth, crisis management, global security, energy, and terrorism. As the UK presided over the summit, a taskforce was designated to take on the role of recommending how to expand global investment in the social impact and sustainability sectors. The product of the task-force is a forty-five page report of high-level recommendations for government and the private sectors, which culminate into a proposed collective effort to quickly unleash $1 trillion dollars of new investment globally, to address social and sustainability problems more efficiently and effectively.
The implementation of the G8 recommendations can already be seen with the introduction in the United States of Senate Bill 2691 or the “Pay for Performance Act”. The Act is an effort by the federal government to kick start social and sustainability related investment, through the encouragement of public and private sector partnerships. Issues targeted by the act range from educational outcomes to workforce development. If the bi-partisan bill is passed, organizations offering social sector services that can save the local, state, and federal government the expenditure of tax payer funds, while providing private sector impact investors with a return, will benefit handsomely from the $300 million dollar earmark attached to the bill. The bill mirrors efforts such as the $21 million dollar Social Impact Bond created by Bloomberg Philanthropies and Goldman Sachs to fight recidivism within the Rikers Island prison system.
Globally, the number of premier opportunities continue to present themselves. The International Energy Agency predicts that sustainable investment in the area of energy will grow to $45 trillion by 2050. As global population growth increases, infectious diseases such as Ebola devastate human populations, and global warming continues to make life more difficult and unpredictable on Earth, there will be an immense need by people and organizations to solve many of the world’s most pressing problems. As world governments become increasingly pressed for capital, and the private sector rakes in profit at record levels, more than ever the public sector will rely on the ingenuity and efficiency of the private sector to address social issues. In turn, the private sector will be forced to rely on the savvy, innovation, creativity of individuals and organizations who are able to provide cost-effective and sustainable solutions that maximize social impact, and provide market-rate returns.
As we enter a new era of human ingenuity, how we respond to various environmental and social issues will come to define the human race as a species. The undeniable importance of the problems we face provide immense opportunity for those who have the foresight to engage social impact and sustainability early. Let us never forget the years proceeding the gold rush, when many arrived to see a porous land that had already been stripped of its fortune and opportunity. Will Social Impact and Sustainability be the new gold rush, or will you wait a few more years to see?
Ean Garrett, J.D., is the author of two books, "Rebirth of a Dream" and "The Immovable Race", as well as the Chief Innovation Officer of the consulting firm, Infinite 8 Institute, L3C, specializing in education and social innovation. Follow him on Twitter & IG: @eangarrett
