When leaders think of investing, their minds often jump to publicly traded stocks or bonds. But that’s starting to change with the rapid growth of private markets or any asset, such as debt or real estate, not traded on public exchanges, according to research by Mckinsey. The Global Impact Investing Network (GIIN), an international think tank on impact investing, recently released a study that estimated the private impact market grew to approximately $1.2 trillion at the end of 2021—up 63% since 2019. While this is an extraordinary jump, it appears to be the tip of an iceberg, as a group of cross-sector corporations worth $16 trillion met last month with the UN Secretary-General to discuss closing the $4.3 trillion financing gap for countries striving to reach the 2030 Sustainable Development Goals (SDGs).
The SDGs, also known as the Global Goals, provide a roadmap for leaders solving some of the world’s most pressing challenges, including providing affordable housing and development loans to underserved communities or tackling global challenges around energy, water, circular economies, sustainability, and healthcare. UN member states adopted the Goals in 2015 as a shared blueprint for peace and prosperity for people and the planet. But implementing solutions requires significant new commitments in capital, which should “inspire leaders to invest responsibly and make a difference in the world,” said Jack Tillotson, a lecturer at the University of Vaasa, in an interview.
The increase in investment opportunities and commitment by nations, corporations and asset managers has led to greater awareness of impact investing. However, the general population still needs to familiarize themselves with this term. Simply put, impact investing is a type of investment that seeks to generate both financial return and positive social or environmental impact. “This type of investing is becoming more popular as people realize that profits and purpose can go hand-in-hand,” observed Tatiana Mitrova, a research fellow at Columbia University, in an interview. Studies have shown that this demand has been most pronounced in Gen Z, Gen X and Millennials, who are seeking investments that are sustainability focused and can have a positive impact on the world. However, according to Mitrova, access and complex due diligence of investment opportunities in this space continue to limit broader market adoption.
These points are validated by Josh Hile, CEO and co-founder of Citizen Mint, a fintech web platform providing access to private market impact investments. “The demand for investments, especially among Gen X and Millennials, that align financial resources with personal interests and values simply isn’t being met in today’s market,” said Hile in an interview. “We started Citizen Mint to provide a new pathway for investors to participate in private market projects that seek to maximize financial returns while having a direct positive impact on the world.” Consequently, the web platform and advanced fintech software marry users’ financial needs and personal values by offering opportunities to partake in impact investment funds that reap positive environmental and social effects. This allows for coexistence between the two, making the platform a primary example of how private capital can help to solve global challenges.
Alternative Investments That Drive Progress
The world is currently at a crossroads. We can either continue on the path of extractive capitalism—a model based on the extraction of profit from humankind and nature—that has led to inequality and environmental destruction or shift to a new sustainable, inclusive prosperity model. The latter will require significant investment in areas such as renewable energy, affordable housing, healthcare, and education. And it will require a new way of thinking about investing, one that considers financial returns and social and environmental impact, because governmental organizations have long been the primary funding sources for social programs and initiatives to drive progress.
Perhaps that’s why recent years have seen a rise in philanthropy and impact investing as supplemental or replacement financing mechanisms. This is likely because many governments struggle with large budget deficits and mounting debt. And it’s also because private investors are increasingly interested in putting their money into projects that will positively impact society and the environment. That said, major asset managers such as KKR, Bain Capital and TPG’s The Rise Fund reserve access for institutions like pensions and endowments and ultra-wealthy individuals.
Consequently, investment platforms like Citizen Mint are tackling this issue, working to remove impediments to provide easier access to curated opportunities with lower minimums. With easier access through a user-friendly platform, investors looking to align their values with their money can confidently partake in alternative investments focusing on social progress in sectors like affordable housing and renewable energy.
The rise of impact investing has coincided with a growing awareness of the need to address social and environmental challenges. As more people become aware of the problems we face, they are also increasingly interested in finding solutions that generate both financial returns and positive impacts, which is why with the right tools and platforms in place, private investors can play a significant role in financing the transition to a sustainable economy.
But, we need leaders to move away from a model of extractive capitalism and towards one that is sustainable, inclusive, and regenerative because the evidence is clear: there is a growing market demand for sustainable, impactful investments, and private capital is increasingly seen as a critical source of financing for social and environmental initiatives. However, to meet this demand, society needs to create new channels for connecting investors with projects that need funding. The sooner that happens, the better off we will be. After all, the time for impact investing is now.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
