Impact Investing: Evolution and Recent Trends in India
Abstract
Impact investing is one form of socially responsible investing (SRI)thatdirects various investment
strategies.Many stakeholders are getting involved these days, in impactful ways, trying to assist needy
people, sectors and countries. Governments implement social programs, multi-lateral aid agencies and
NGOs provide direct services and advocate for policy changes, and individuals volunteertheir time, talent
and resources to indicate their concern for society. Today trillions of dollars are spent globally on such
programs. On the other hand, the private sector also plays an increasingly important role as corporations
adopt sustainable practices into their business decisions and seek broader, double and triple bottom line
objectives.
While Corporate Social Responsibility has gained importance in all sectors in the last few years, SRI and
Impact Investing have particularly gained importance in the financial sector. The ascent of SRI is expressed
by an increasing number of SRI or sustainability funds and indices, and ultimately by the increasing amount
of financial resources invested in socially responsible ways. SRI is already a booming market in both Europe
and the United States. In particular, it has become an important principle guiding the investment strategies
of various funds and accounts leading towards a sharp rise in the total assets under management by SRI
principles with focus on SRI requirements.
In Asia, the field of impact investing is less mature than in Europe or the United States. Much of the social
enterprise funding activity occurs as small direct investments, often through family and friends. Despite this
late start, experts predict the region has strong potential to grow.
For the first time anywhere in the world, large listed companies in India are now mandated by the 2013
Companies Act to apply 2% of average net profits to corporate social responsibility schemes. In the same
context, this paper describes Impact Investingand portraits the evolution, major trends and its applications
in India and Asia.
