Last week I joined over 550 others from 43 countries at the Global Steering Group Impact Summit in Chicago to discuss the global phenomenon of impact investing. The Global Steering Group (“GSG”) was established in 2015 as the successor to the Social Impact Investment Taskforce, created and empowered by the G8. Its objective is to catalyze the impact investing market globally by providing a unified vision of the market potential and empowering, supporting and education country-led efforts.

Sir Ronald Cohen (HBS MBA, 1969), leader of the GSG, kicked off the conference with a bold vision: an impact revolution in which finance and investing is transformed to include risk, return, and impact by 2020.  To state the obvious, this is an audacious goal for a field that commands less than $200 billion in assets under management globally.   

The conference then proceeded to explore various levers to reach this tipping point: supply side, demand side, intermediaries, and policy. Speakers touched on opportunities for new fund structures to aggregate capital; measurement and transparency as a way to unleash new capital; capacity building for social entrepreneurs to ensure sufficient pipeline. These are all reasonable and defendable actions to support the growth of this emerging practice. 

Following the two day event, I was asked by a friend, “What did you leave pondering?” I thought I would share one of my musings here:

Much of the discussion at the conference and within the field has been around the blocking and tackling of minimizing barriers to entry (education, taxonomy, policy) and maximizing the opportunity set (pipeline, products). Put more simply, there is an emphasis on building out an ecosystem with an underlying assumption that if you create the enabling factors, capital will flow. “Build it and they will come,” as the saying goes.

While in some cases, this may be the case, I am not yet convinced the adoption curve is that simple. Take one example – the U.S tax authority issued clarifications in 2015 on the ability of foundations to take mission into consideration when investing their endowments, removing the often cited legal barriers to practice impact investing out of fiduciary capital. While heralded as a major win for impact investing, foundation endowment capital still remains on the sidelines. 

There are a number of plausible reasons – industry track record, limited product choice, legacy decision-making structures – and there is likely a multi-dimensional if not idiosyncratic answer.  However, research by Wins, Annet and Berhard Zwergel (2016) on the German Socially Responsible Investing market suggests we may be overlooking murkier elements that influence decisions: motivation and perception.  Specifically, their research suggests that different motivations and underlying beliefs will drive different investment decisions even with shared assumptions about a product’s risk and return profile.

The proof points, vocal champions (including Bono!), and early policy wins have created an important source of momentum. However, reaching a “tipping point” will require winning over not just those who want to believe in doing well by doing good, but also those who are suspicious of the role of capital in social good. 

Back on campus, I’ll be thinking and reading about the relationship between interest, demand and action in other contexts. In the meantime, if you have thoughts, reactions or suggestions – send me an email: creimersbrumme@hbs.edu.

Caitlin Reimers Brumme (MBA 2012) leads the new Impact Collaboratory at HBS.

Find out more about what’s happening at HBS in Impact Investing here.