Building a New Impact Economy: Insights from Harlin Singh and Sir Ronald Cohen

Did you know that over $40 trillion has flowed into ESG investing in recent years? Yet impact investing’s growth remains surprisingly uneven despite booming consumer demand and pressing global challenges.

The Slow Adoption of Impact Investing

In the face of urgent climate and social crises, one might expect rapid growth in impact investing. Despite significant momentum from IPCC reports and heightened consumer and talent preferences, adoption has lagged. Harlin Singh and Sir Ronald Cohen point out that early efforts focused heavily on government dialogues rather than market-driven change. As investors demand greater accountability, companies are being pushed to improve governance, reduce emissions, and address social issues. However, barriers such as greenwashing and inconsistent reporting still hinder progress.

“With big data and computing, we can measure the impacts of companies more accurately than we measure risk.” — Sir Ronald Cohen

The Case for Standardized Impact Principles

The analogy to early 20th-century financial reporting is striking. After the 1929 crash, it took four years to adopt Generally Accepted Accounting Principles (GAAP). Today, impact measurement lacks similarly robust standards. Sir Ronald highlights recent moves toward mandatory impact accounting and full transparency on environmental data. Regulators like the SEC and the International Sustainability Standards Board are laying the groundwork for comprehensive disclosures. In three years, investors will likely access uniform impact statements, enabling direct comparisons of ESG performance alongside financial returns [verify].

The Future of Impact Investing

Consumer and employee demand for corporate responsibility is reshaping investment strategies. Evidence shows that higher pollution levels often correlate with lower stock valuations, making environmental stewardship materially relevant. Social impact bonds and conservation financings—like the World Bank’s South Africa conservation bond—demonstrate how capital can fund measurable outcomes. These innovations illustrate the shift from single materiality, focusing only on financial profit, to dual materiality, where societal and environmental effects are integrated into valuation models.

Leveraging Technology for Impact Measurement

Advancements in satellite imagery, AI, and big data analytics are revolutionizing transparency in the impact economy. Combining remote sensing data with machine learning algorithms enables real-time tracking of deforestation, carbon emissions, and social indicators. Municipal bonds now factor in climate resilience metrics, linking infrastructure investment to creditworthiness. As data quality improves, investors gain clearer insights into long-term risks and opportunities. This integration of financial and impact data paves the way for more efficient markets and informed decision-making.

Embracing Impact for Enhanced Returns

Investors often hesitate to embrace impact strategies, fearing trade-offs between social good and profitability. Yet companies with strong ESG credentials benefit from reduced regulatory and taxation risks. For example, ORCAM’s smart eyewear for visually impaired users taps into a potential market of over 250 million people, while also serving the 800 million illiterate adults worldwide. By addressing massive latent demand at affordable price points, impact ventures unlock new revenue streams and improve lives. This dynamic demonstrates how impact and returns can reinforce each other on a higher-efficiency frontier.

Conclusion

• Embrace standardized impact data and transparency to align investment portfolios with both profit and purpose, unlocking new markets and mitigating long-term risks.

As the economy evolves, how will your organization integrate impact investing principles to drive value for people, planet, and profit?