Why For-Profit Climate Change Entrepreneurship & Impact Investment Needs To Be Our Focus

Climate change is one of the most pressing global challenges of our time. It is a problem that threatens our planet’s ecosystems and the very survival of mankind. We have all read and understand the criticality as borne out by recent reports by the Intergovernmental Panel on Climate Change (IPCC), it is a fact that global temperatures are set to rise by 1.5 degrees Celsius in the not-to-distant future. While governments and non-profits have been working to mitigate the impact of climate change, it has become increasingly clear that these efforts are not enough. We need entrepreneurs with bold for-profit mindsets to help tackle this challenge.

While there are many reasons for this, the main one is that businesses are uniquely equipped to tackle climate change. Business leaders are skilled at identifying gaps in the market and creating innovative solutions to meet these needs. In the case of climate change, there are many opportunities for entrepreneurs to develop exciting new products and services that can help us address this issue.

Let's take renewables as an example, there is a growing need for renewable energy solutions. As fossil fuels become increasingly scarce, we need entrepreneurs who can develop new technologies that harness the power of the sun, wind, and water. While there are already many businesses working in this area, there is still a lot of room for innovation and growth. Entrepreneurs who can develop more efficient solar panels, better wind turbines, or more effective energy storage solutions will be in high demand.

Another area where entrepreneurs can make a big impact is in the field of sustainable agriculture. Climate change is already having a significant impact on our food supplies, and this trend is set to continue. Entrepreneurs who can develop new farming techniques, more efficient irrigation systems, or new plant varieties that can thrive in changing conditions will be invaluable.

People are starving and do not have the basic necessities for survival. Surely putting the greatest minds to this issue and getting flows of capital and solutions is our collective responsibility. The Food and Agriculture Organization (FAO) of the United Nations, in 2022, around 822 million people worldwide were considered undernourished, while over 2 billion people lacked regular access to safe, nutritious, and sufficient food. As for water, according to the World Health Organization (WHO), as of 2019, approximately 2.2 billion individuals lacked access to safe drinking water. These numbers are definitely on the rise and will continue to fluctuate as we see an increase in environmental disasters, conflicts, and economic conditions continue to play out. By 2025, half of the world's population will be living in water-stressed areas.

Finally, entrepreneurs can also help us to change the way we live and work. There are many new businesses that are focused on developing sustainable products, reducing waste, and creating more environmentally friendly workplaces. These businesses have the potential to create a significant positive impact on our planet and ensure that we leave a healthy, sustainable environment for future generations.

While some people might think that making a profit and protecting the environment are at odds with each other, the reality is that they can go hand in hand. By creating profitable businesses that are also focused on social and environmental impact, entrepreneurs can be a force for good in the world.

The reality is this will need consciously driven Impact Investment investment globally. It is important to start having these urgent collective strategies with funds, investors, and family offices to ensure they can see the benefits not only commercially but for the planet, we ALL call home!

Impact investing needs to have a strong and compelling narrative and call to action. Where putting capital into companies, organizations, and funds with the intention of generating measurable social and environmental impact alongside a financial return. The purpose of impact investing is not just to maximize returns like traditional investing but to make a positive impact on society, the environment, or both.

Importance of Impact Investing

Impact investing recognises that financial returns are not the only measure of success for investors. It acknowledges the importance of creating a positive social and environmental impact as well. Therefore, this type of investment creates a balance between generating financial returns and positively affecting society and the planet.

According to a report by the Global Impact Investing Network (GIIN), the size of the impact investing market currently stands at USD 1.164 trillion in assets under management (AUM) – a significant psychological milestone for an industry still maturing and growing in sophistication. Impact investing strategies are showing significant momentum despite disruptions from COVID-19, with impact investors growing their AUM and new entrants joining the industry.?This indicates a growing interest in impact investing among investors, financial regulators, policymakers, and civil society. But there is still a huge gap if we are to slow down climate change.

Impact investing is one of the most potent tools the world has at its disposal to build toward a just, inclusive, and sustainable future.The coming years present a unique opportunity to continue scaling the impact investing industry. By increasing the amount of capital allocated toward impact solutions, the market can ensure that impact investing fulfills its promise.?

Getting Investors To Understand The Benefits of Impact Investing

1. Social and Environmental Impact: Impact investing allows investors to support companies or organizations with a focus on sustainability, social justice, and environmental protection, which can have a positive impact on society.
2. Financial Returns: Along with social and environmental impact, impact investing also provides financial returns to investors. Impact investments can generate similar or even better financial returns than traditional investments. We have seen this unfold in recent years.
3. Risk Reduction: Investing in companies or organizations that prioritise social and environmental responsibilities may lead to a reduction in risk. A company that considers its impact on society and the environment is more likely to have long-term financial sustainability, which can help mitigate financial risks and reduce the cost of borrowing.

Challenges of Impact Investing

1. Measuring Impact: One of the major challenges of impact investing is measuring the social and environmental impact of an investment accurately. Investors need projects that establish a clear set of metrics to analyse the social and environmental performance of their investments.
2. Lack of Standardization: There isn't a standardised definition of impact investing, which makes it harder for investors to navigate a diverse range of investment options. This is changing but too slowly.
3. Limited Investment Opportunities: Despite the growing demand for impact investing options, there are limited investment opportunities in certain regions or sectors. Impact investors have fewer options to invest in certain sectors, which might limit their ability to achieve their social and environmental goals.

Final Thoughts

Impact investing has the potential to provide both social and environmental impacts and financial returns. As the world faces challenges such as climate change, social inequality, and economic injustices, impact investing offers a path forward toward a more sustainable and equitable economy.

The reality is we also need more entrepreneurs with a for-profit mindset to help tackle the biggest issues of our time. These individuals have the skills and abilities to identify gaps in the market, create innovative solutions, and drive growth and impact. By working together, we can create a better, more sustainable future for all.

About Me: Impact Investor - Climate Change Entrepreneur - CEO & Founder Of The Storey Group - Project Lead The One Billion Tree-Planting Initiative (OBTI) EcoMatcher Ambassador UAE - World Impact Forum (WIF) Ambassador