Track record, flexibility and a non-linear approach will help the impact industry ‘step up’

There has been a 'complete failure' to convince the wider market of the financial returns of impact investment, says Trill Impact founder Jan Ståhlberg.

The gauntlet was thrown down on day one of the Impact Investor Global Summit. The impact investing community has been called to “step up” its efforts to convince others of its financial viability by Trill Impact founder Jan Ståhlberg.

Speaking on the opening panel yesterday morning, Ståhlberg said: “Let’s face it, we’re a complete failure as an industry. When I raised €900 million in our first impact buyout fund in 2020, it was the largest impact fund in Europe.” By contrast, “EQT raised €40 billion in one year” across its private markets products, showing how limited impact investment is in comparison.

Ståhlberg was among the founders of EQT in 1995. Trill Impact was established in 2019 and ranked 17th in NPM’s Impact 30, which identified largest managers of impact capital.

The global impact investing market continues to grow; it now exceeds $1 trillion in invested capital across all asset classes, up from $715 billion in 2020, according to data from the Global Impact Investing Network released last year.

Nevertheless, it still remains under-explored by many institutional investors. Research from Cambridge Associates found that perceived negative impact on financial performance was the joint most popular reason not to engage in sustainable and impact investing. Furthermore, ESG and impact’s movement into the mainstream risks being hindered by a pushback from some areas of the market, particularly in the US.

Ståhlberg said that the industry needs to do more work to explain the benefits of impact investment to a wider market that is still often sceptical of the return profile: “Chief investment officers are incredibly data driven and we don’t have data on our side. […] So we’ve got to step up and we’ve got to give a credible story. Why is it different this time? Why can you make money on this? And why is this a good decision for your constituencies?”

How, then, should industry actors make the argument for impact investment? Other panellists offered their views. BlueOrchard head of impact Veronika Giusti Keller told managers to “walk the talk” by establishing an impact management framework that can track and demonstrate tangible results to investors. “It’s not a one-person job. I mean, you need people behind [the scenes] to monitor, to check how impact targets have been achieved, to engage with companies to truly promote change,” she added.

“Demonstrated track record is going to be the most important thing,” suggested Peter Spring, partner at Bain Capital Double Impact. “I think, over time, demonstrating that a lot of the problems that we’re looking to solve are some of the major problems that face the planet and will have enormous tailwinds behind them [will be key].”

Dimple Sahni encouraged managers to be flexible in their thinking when it comes to impact. Anthos Fund & Asset Management, where Sahni is a managing director, has a strategy that allows them to invest across different asset classes. Don’t take a linear approach when it comes to investing. Be nimble, be agile, she said: “We’ve done it through our multi-asset approach but I think if you remain flexible, you can think that: most of the companies we’re investing in are really built to withstand the volatility [in the market].”

Moderator Laurie Spengler, CEO of Courageous Capital Advisors, viewed Ståhlberg’s comments as a “very appropriate challenge” for the impact community, and one that should provide the foundation for the rest of the summit. Yesterday’s panels covered everything from investment opportunities in food and agriculture to impact’s role in the energy transition. The conference continues today.