Impact Investing Guide

What makes an ESG project truly successful? Let’s take a step back and imagine two teams, Team A and Team B. Both are working on the same sustainability initiative. Team A sees it as a necessary cost—one that benefits the environment but doesn’t have much to offer financially. Team B, on the other hand, approaches it differently. They not only focus on the environmental impact but also make sure the project brings financial benefits, turning it into an investment rather than a burden. Which team do you think will get more support for future projects? The answer is clear. When you align environmental, social, and governance (ESG) initiatives with financial goals, The results speak for themselves: reduced costs from resource-efficient practices, increased revenue from sustainable products, and even better access to capital from investors who favour companies with strong ESG performance. According to a McKinsey study, companies with solid ESG practices have 10-20% higher returns on their investments over time. Now, How do you get it right? It starts with well-defined goals and initiatives. Take, for example, A simple energy efficiency project—installing LED lights across all parking lots in a real estate portfolio. It’s a move that cuts carbon emissions and lowers utility costs. This shows both a commitment to sustainability and boosts operational efficiency. The difference between a good and a great ESG strategy is in seeing the long-term benefits and scalability. Instead of chasing short-term wins, focus on initiatives that can grow. It’s also essential to understand the financial side. Before pitching any project, it’s worth using a return-on-investment (ROI) calculator, which helps you demonstrate the tangible financial benefits. Collaborating with your finance team on this could make the difference between getting a project approved or rejected. And don’t forget about government incentives and tax credits—they can make projects more financially viable. Lastly, Remember, ESG implementation isn’t a sprint. Some initiatives will take time to show results. But every small step forward counts, and every success, no matter how small, deserves to be celebrated. What has your experience been with ESG? Have you found ways to balance sustainability and financial performance in your projects?

Creating lasting change means addressing root causes, not just symptoms—but how can funders navigate the complexities of systems change while ensuring measurable progress? Traditional metrics often focus on short-term outcomes, making it challenging to evaluate the broader impact of long-term investments. To truly drive systemic transformation, funders need new tools and approaches that combine patient, catalytic capital with dynamic evaluation and continuous learning. A recent article in the Stanford Social Innovation Review underscores the importance of rethinking our approaches. It advocates for combining patient, catalytic capital with dynamic, real-time evaluation methods. By mapping systems, contributions, and pathways, funders can better understand their role in driving systemic shifts and adapt strategies to evolving challenges. Key takeaways: ✔️Ask the right questions: What parts of the system have changed? Did our efforts contribute? Are our pathways effective? ✔️Prioritize continuous learning: Move beyond one-time evaluations. Create feedback loops that guide decisions and refine approaches in real time. ✔️Leverage catalytic capital: Fund bold experiments in emerging areas, embrace learnings from failures, and build on successes to scale impactful solutions. Systemic change is not linear; it requires humility, adaptability, and a commitment to the long game. By embracing these practices, we can amplify the transformative potential of social investments and create a lasting impact. What strategies have you seen work for evaluating and scaling systems change initiatives? Let’s discuss. #SocialImpact #CatalyticCapital

When you set out to build a company that is good for society, how do you make sure your intentions go beyond just window dressing? In the 21 years that I have written about startups for Bloomberg Businessweek and Fortune and WIRED, I've seen a lot of companies make short-sighted decisions that compromise their social goals. They blame the economy, or the stock market, or a competitive business landscape. They say it's impossible. But companies like Warby Parker prove it’s possible to build a strong business that does good, *even* after 16 years and *even* in this economy. So how do we ensure that purpose stays at the heart of our work? Cofounder Neil Blumenthal shared his thoughts on a recent episode of the #HelloMondayPodcast: 1. Define Clear Values: Purpose can’t just be a buzzword. Embed your company’s core values into everything you do—from how you hire and treat employees to the sustainability of your supply chain. 2. Measure and Share Impact: Be transparent about your goals and track your progress with hard data. Share what’s working, and just as importantly, what’s not. True commitment to change means accountability, not perfection. 3. Engage Stakeholders: Your employees, customers, and communities should have a voice. Create feedback loops that allow for honest input and adjust your approach based on their needs, not just what looks good in a mission statement. 4. Lead by Example: It’s not enough to talk about doing good—your leadership needs to embody these values. Authenticity comes from action at every level of the company. We don't have to sacrifice social impact for growth. It takes intentionality and accountability, but it’s possible to stay true to mission. And: Big gratitude to Leanne Pittsford & the Lesbians Who Tech & Allies Summit for inviting us to record this episode live in September in New York City! What do you think? How can businesses balance purpose with profitability in today’s challenging environment? Who is doing it well?

I’m pleased to share this TEDx talk (link in comments) on the topics I’ve been working on for the past decade. How can we... - Finance high-quality education to the hundreds of millions worldwide who don’t have access? - Have as much impact as scholarships but with far more scalability? - Eliminate student debt in a fiscally responsible manner? - Improve retraining & workforce development? - Better align social impact & financial returns? - Build upon and solve the challenges with Social Impact Bonds (SIBs) & Income Share Agreements (ISAs)? - Create a world where “opportunity is everywhere” and not just “talent is everywhere”?   These are the questions I focused my Oxford DPhil/PhD on.   As part of that, I developed a new approach that I became convinced should exist. I called this new approach the FORTE Model, standing for Financing Of Return To Employment. Rather than letting the research sit in the Bodleian Library collecting dust, I decided to do what I could to bring this new approach to life.   I’m proud of the fact that over the past few years, we’ve successfully piloted this approach in five countries around the world, helping those who were previously unemployed and without access to education, to get back on their feet, gain financial freedom, and achieve their full potential.   The FORTE Model is not only a new way to finance education that doesn’t burden individuals or governments. It’s also a new way of doing impact investing, a new type of public-private partnership, a better way to drive quality in education, and a way to make philanthropy more effective. I view it as trickle-up economics – let’s help those who are struggling and disadvantaged, and then benefits flow up through the system.   For a long time, the social impact sector has wanted a way to perfectly align social impact and financial returns at a systems level, without a trade-off, so we can mobilize the world’s greatest resources to help the world’s most vulnerable. I believe this is how we can do it.   The work of making high-quality education accessible at scale really matters. It demands large-scale change and doing things differently, not just incremental improvements. I’m incredibly grateful for everyone who has joined as partners in this important work, and together been pioneers of this new approach. To the governments, investors, foundations and training partners worldwide that have been involved so far – thank you. The greatest impact of this work is still to come. But it needs to be a collective effort. I’m not protective of this idea – I'd love for others to adopt it and implement it too. There’s strength and scale in working together. It'd be great if you can share this TEDx talk with those you think may be interested – whether foundations, philanthropists, impact investors, government representatives, or public policy advisors. Please reach out to me if you want to learn more, get involved, or support this in whatever capacity!

Which SDGs can expect to see the most capital from impact investors in the next 5 years? The latest data from the GIIN's State of the Market 2024 report provides a comprehensive look at how the impact investing ecosystem is evolving, especially in capital allocations that address critical environmental challenges. We’ve seen subtle yet significant shifts in investment patterns that highlight the changing priorities of impact investors. Historically dominant SDGs like climate action (SDG 13), decent work and economic growth (SDG 8), and good health and well-being (SDG 3) have seen a decline in capital allocation from 2019 to 2024. This reduction could indicate that impact investors are becoming more specialized, focusing on narrower environmental and social goals. Over the next five years more than half of impact investors plan to increase their capital allocation in energy (69%), food and agriculture (61%), infrastructure (55%), water, sanitation and hygiene (55%), healthcare (54%) and housing (51%). These sectors are essential to tackling global challenges like climate change, the public health crises and food insecurity. With impact investors allocating capital across different sectors and geographies, the report reveals how environmental priorities are reshaping strategies. Investors are aligning their strategies with evolving global needs, becoming more adept at responding to changes in environmental and social landscapes. Dive into the full report and explore how investors are shaping a sustainable future: https://lnkd.in/eCDSh8Q3 #GIINresearch2024 #SDGs #ClimateAction #GlobalImpact 

As we are seeing in real time, public budgets alone cannot meet the scale of climate risk, housing instability, or infrastructure gaps facing our nation. That’s why it’s never been more urgent to align private capital with public purpose. The future of resilient, thriving communities depends on what we do right now — and who we invite to the table. This excellent report from The Earthshot Prize offers real-world examples of how mission-driven capital — from CDFIs, community banks, green banks, and other private actors — is being deployed. It’s a data-rich blueprint for how private sector capital can meet public needs with rigor. 👉Read report: https://lnkd.in/eQ45iC7W Here’s what stands out for me: -Internal Rates of Return (IRR) ranging from 5%–10% in mission-aligned infrastructure deals -Leverage ratios up to 6:1, where philanthropic or public funds unlock layers of private financing -Delinquency rates <1.5% across portfolios serving borrowers excluded by traditional credit systems -Energy retrofit deals reducing operating costs by 15–30% within 2–4 years -Disaster recovery loans turning around faster than FEMA disbursements. These are not hypothetical models. These are field-tested, financeable and market driven solutions. #CommunityFinance #PrivateCapitalForPublicGood #ClimateFinance #ImpactInvesting #CDFI #HousingEquity #Resilience Jason Knauf LVO Bezos Earth Fund Michael Berkowitz Dee Yang Tucker Van Aken Jay Koh Jeremy Oppenheim Holly Li Dan Carol Galvanize Sarah Kapnick

While lots of billionaires make empty pledges, one founder gave away his entire $1.5B company. The result? A $100M/year engine for saving the planet. Here's the blueprint: In 2022, Patagonia's founder Yvon Chouinard did something unprecedented - he gave away his $1.5B company. But he didn't turn it into a non-profit. He discovered something more powerful. A well-run business can create more impact than any charity. Here's the genius structure he created: • 2% voting stock to Patagonia Purpose Trust • 98% non-voting stock to Holdfast Collective This ensures two things: • The company stays competitive and profitable • Every dollar of profit fights climate change The results are staggering: • 848 environmental organizations funded • 814 employees involved in grantmaking • ~$100M generated annually for climate action All while remaining a thriving business that: • Competes and wins in market • Pays employees well • Creates products people love • Drives massive environmental impact This reveals something crucial about entrepreneurship: Your business isn't just a way to make money. It's your greatest lever for positive change. Most founders miss this because they're stuck in old thinking: • Maximize profits at all costs • Put shareholders first • Treat impact as an afterthought But the most successful businesses of tomorrow will: • Align profit with purpose • Solve real problems • Create genuine value • Make the world better Not because it's nice - because it's smart business. The world's biggest problems are also its biggest opportunities. Climate change, healthcare, education - these aren't just challenges. They're trillion-dollar markets waiting for business solutions. I learned this the hard way. For 15 years as a founder/CEO, I chased profit first, and purpose second. Until I realized that the more I aligned my business with genuine impact, the more successful it became. Now Inside-Out is one of the leading startup coaching firms in America. And our clients positively impact areas from climate, education, AI, and health. This is what conscious leadership is about.

The SDGs: Stop Overthinking, Start Delivering United Nations Environment Programme Finance Initiative (UNEP FI) Look, we've made sustainability too complicated. Every consultant has their framework. Every tech vendor has their platform. Every regulation has its acronym. But here's what actually matters: The Reality Check The world faces clear challenges: - Climate change is threatening business operations - Supply chains are vulnerable to resource scarcity - Talent wants purpose-driven work - Investors demand real impact - Regulators are done with greenwashing What Companies Actually Need 1. Clear Focus - Pick the SDGs that directly impact your business - Focus on material issues, not checkbox exercises - Set measurable targets that make business sense 2. Practical Action - Start with your core business impact - Fix what you can control first - Scale what works, learn from what doesn't 3. Real Results - Track metrics that matter to your bottom line - Measure actual impact, not just activities - Report on progress, not promises The Business Case Is Simple Companies taking real action on SDGs see: - 20% average cost savings from resource efficiency - 2-3x employee engagement rates - 30% higher customer loyalty - Better access to capital - Lower regulatory risk Stop Wasting Money On - Excessive frameworks and certifications - Complex consulting engagements - Siloed sustainability initiatives - Fancy reports nobody reads - Tech platforms that create more work Start Investing In - Direct emissions reduction - Circular business models - Supply chain resilience - Employee development - Community impact And The Way Forward 1. Month 1-3 - Pick your priority SDGs - Set clear business targets - Start measuring baseline impact 2. Month 4-6 - Fix obvious problems - Train your teams - Build basic systems 3. Month 7-12 - Scale what works - Drop what doesn't - Show real results Bottom Line The SDGs aren't a compliance exercise. They're a blueprint for future-proofing your business. Every dollar spent should drive both impact and returns. Every initiative should solve real problems. Stop overthinking. Start delivering.

Over the past several months, we’ve been deep in the weeds—analyzing transactions, interviewing investors, and stress-testing assumptions—to understand why private capital still struggles to scale in emerging markets, and what it would take to change that. Later this month, we’ll be launching the result of that work at the Financing for Development Conference in Seville: a new report I coauthored with Perrine Toledano and Tucker Wilke at the Columbia Center on Sustainable Investment in partnership with the SDG Impact Finance Initiative. Blended finance isn’t just about concessional capital. That’s one of our core takeaways. Private investors have far more tools at their disposal than they often realize. In the report, we distill seven field-tested strategies drawn from real deals and hard-won lessons across EMDEs: 1️⃣ Start with project risk – Understand what’s really blocking investment and tailor your risk mitigation accordingly. 2️⃣ Use risk mitigation tools first – Guarantees and insurance often go further than concessional capital. 3️⃣ Leverage national ownership – Local buy-in is the strongest defense against political risk. 4️⃣ Adapt your standards – Rigid structures kill deals. Flexibility can unlock value. 5️⃣ Work with local financial institutions – They bring trust, networks, and long-term capital. 6️⃣ Align with national priorities – This isn’t just about impact, it’s also about reducing risk. 7️⃣ Partner with strong developers – Because execution matters. A credible sponsor can make or break a deal. The financing gap in EMDEs is real, but solvable. With the right playbook, private capital can be part of the solution. #BlendedFinance #PrivateCapital #EMDE #ImpactInvesting #CCSI #SIFI #FfD4 #DevelopmentFinance

Clean cooking needs $8 billion a year to reach universal access – but we’re mobilizing barely a third of that. This isn’t just a funding gap. It’s a development failure. As I said early today: “We’re paying trillions of dollars to avoid spending billions." At what point do we stop calling this an “investment gap” when the cost of doing nothing is a thousand times higher? The numbers speak for themselves: ➡️ $2.4 trillion – the estimated annual cost of dirty cooking in terms of healthcare, environmental degradation, and lost productivity. ➡️ $2.5 billion - the total annual investment currently going into clean cooking solutions. That’s not even a third of what’s needed to achieve universal access by 2030. This is not an “investment gap.” It’s a missed opportunity to align climate, health, gender equity, and economic development goals through a single intervention. To change the trajectory, we need to shift the financing paradigm. Here are three catalytic approaches leading the way: 1️⃣ Blended finance: Combining grants, guarantees, and concessional capital to de-risk private investment, reduce end-user costs, and help early-stage enterprises scale. 2️⃣ Digital pay-as-you-go systems: Leveraging mobile payments and smart tech to improve affordability, enable real-time monitoring, and unlock access to carbon and impact finance. 3️⃣ Outcome-based financing: Linking investor returns directly to measurable social and health results, shifting focus from inputs to verified impact. At UNDP, we’re advancing these models through Financial Innovation Labs, turning clean cooking from a development afterthought into core climate and infrastructure investment opportunities. Let’s de-risk, digitize, and diversify. Clean cooking is not a side issue; it's a frontline solution for sustainable development. #EnergyforDevelopment #CleanCooking