Impact special: how private equity can be part of the solution

Impact investors can no longer go it alone. To make a real difference, they must connect with governments, NGOs and corporates to work towards a common goal.

As world leaders flocked to Manhattan’s East Side in mid-September for the first day of the United Nations General Assembly, on the other side of the island some of the most senior names in finance and business came together for a forum on scaling impact investment.

Hosted by The Abraaj Group, Bank of America Merrill Lynch and the Global Impact Investing Network, the forum aimed to address the business opportunities afforded by the 17 United Nations Sustainable Development Goals and how to tackle some of the biggest challenges facing the modern world.

While most of the SDGs were mentioned throughout the course of the day, one in particular came up in practically every session: SDG 17, ‘strengthen the means of implementation and revitalise the global partnership for sustainable development’.

In his keynote address, Abraaj founder and chief executive Arif Naqvi spoke of the “profitable and sound business proposition” around impact investing, and stressed that large-scale gains towards the SDGs will only happen when all stakeholders come together.

Royal Philips chief executive Frans van Houten talked of having not just a financial goal but one of increasing the number of lives his company’s brand touches a year from two billion to three billion.

“Inevitably, then, we need to solve the challenges of the developing world, because we are now basically already touching the majority of the mature markets,” he said.

For Royal Philips to provide its healthcare products and services in, for example, rural Africa, a complete redesign of primary care in those regions is needed – something much bigger than one company, no matter its size, can achieve. Such a goal requires the mobilisation of “literally tens of billions of dollars”, Kito de Boer, the new head of the impact investing business at Abraaj, told delegates.

“You can’t do that as a single company, you can’t do that just as the private sector, you have to have the public, you have to have the social sector, you have to mobilise philanthropy.”

But as panellists and delegates pointed out, the relationships between governments, NGOs, large corporations and financial investors has not always been an easy one. This is where a framework such as the SDGs help create, as van Houten put it, a “common language around what good intent means”.

“The SDGs represent a great framework,” de Boer said. “I think we know where the path is, we just have to walk down it.”

Investing for impact sounds simple, but of course, isn’t. As van Houten said, if something like providing primary healthcare for all were easy, “it would have been solved already”. But the will is there, and a nascent, but growing, proportion of the private equity industry is already making strides to finding a way. Our Impact Investing Special takes a look at the progress the private equity community is making on that path.

Look out for more from our Impact Investment special in the next few days.