The point of view of an impact investor – redefining the concepts of risk and retour

The notion of a trade-off between financial, social and environmental returns has dominated the impact investing debateuptonow. Bamboo Finance views these components in terms of a total return that needs to be maxi- mized and it does not believe that profits have to be sacrificed in return for a greater social and environmental impact. It claims that it is possible both to maximize profits and achieve social and environmental benefits by investing in the equity of businesses that provide essential products and services to low and lower-middle income consu- mers in emerging economies.

Low-income households in emerging markets are already consumers of essential goods and services (healthcare, energy, financial services, agriculture for example), but they often pay dearly for very poor quality. Access to new and / or improved products and services can have an immediate positive impact on their quality of life. The social, environmental and economic impact can be intrinsically linked to the products and services, and profit and impact objectives can be achieved simultaneously. A trade-off is not necessary.

It is important to note that impact investing is still in its infancy. Certain sectors are ripe for investment but others are still testing the viability of business models. Microfinance was among the first sectors selected for impact investment. New financial services models have emerged to serve the unbanked more effectively and financial services for low-income consumer remains a high growth, high value and high impact sector. Bamboo Finance’s investment in the Mongolian TenGer Financial Group is a case in point (BOX) and there are also enormous social and environmental impact investment opportunities in clean energy, agriculture and healthcare.

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