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Investment, Innovation, and Impact

At the U.S. State Department, we seek to support the work of innovators that are contributing to an Impact Economy by developing and deploying cutting-edge business and financial models that generate financial returns and positive social and environmental change. These innovators constitute a diverse group of investors including pension and sovereign wealth funds, corporations, foundations, banks, international financial institutions, and retail investors and cut across asset classes to include cash deposits to fixed income, public equity, private equity, real assets, and alternatives. Today, this emerging class of investors is generating business opportunities that analysts estimate could reach between US$500 billion and several trillion dollars over the next decade.

Promoting the development of the Impact Economy is at the center of U.S. foreign policy objectives. At the Fourth High-Level Forum on Aid Effectiveness in Busan, South Korea, Secretary of State Hillary Rodham Clinton announced a shift in U.S. development assistance from donor-driven aid to catalytic investment. Further, the Secretary’s 21^st Century Statecraft calls for us to reach beyond traditional state-to-state interactions and harness the assets and tools of business to strengthen our diplomatic efforts.

To support the development of an Impact Economy, the Secretary‘s Global Impact Economy Forum gathered 250 high-level investors, business executives, entrepreneurs, philanthropists, academics, and policymakers to discuss how to create greater coordination, collaboration, and efficiency in this emerging industry. The action-oriented Forum included two days of interactive panels, workshops, inspirational keynotes, networking breaks and announcements of public and private sector deliverables that will be implemented post-Forum.

Objectives of the Forum:

The Forum aimed to improve collaboration between investors, businesses, entrepreneurs, governments and civil society and create opportunities to enhance and expand the Impact Economy. Key themes included:

1. From aid to investment: How can government and philanthropic resources and tools catalyze business and investment opportunities that yield financial, social and environmental returns?
2. From short-term to long-term horizons: Why is it important that businesses look beyond short-term shareholder value creation to longer term, sustainable, risk-adjusted returns that will enable them to maintain their competitiveness, build brand equity, and capture new markets? What are key barriers and hurdles to achieving this? What models are working? What can be done to place more emphasis on longer-term value creation?
3. From silos to synergy: How can we leverage the assets of multiple players and employ a design approach to solve multi-dimensional challenges? How can the government leverage its resources to support the private sector’s efforts to create market-driven solutions to the world’s most pressing challenges?
4. From status quo to a supportive policy framework: What needs to be done to create a supportive policy and institutional environment to incentivize investments that yield attractive financial, social, and environmental returns? Which countries have made significant progress to date? In which sectors? How can we replicate best practices and learn from past failures?