Access to capital is crucial when intending to make real sustainable change happen. Impact Investing challenges the view that social and environmental issues should be addressed only by philanthropic donations, and the view that market investments should focus exclusively on achieving financial returns. As enormous growth in the Impact investment sector has been predicted, many types of investors have already entered the impact investing market. With over 2 billion of the worldʼs population still living below the poverty line, it is only rational to start involving the private sector in solving the world’s problems, sooner rather than later.
The case of Guernsey:
In Guernsey, there is no need to implement wholesale changes in order to become a global hub of Impact Investment. Rather the island could harness and re-focus the existing assets, infrastructure and financial sector expertise and pivot its messaging to develop itself into a jurisdiction of choice for the Impact Investment industry, and to be a conduit in providing capital for social and environmental goals.
Imagine if financial organisations in Guernsey began to speak to their clients about Impact Investment opportunities. The potential market share of the global impact investing market represents a sizeable source of business for Guernsey if taking the 0.3% market share of global AUM (US$3 billion) to be the floor. If efforts are made to cultivate a significant global hub for at the least European, African and Asian Impact Investment, it could be possible for Guernsey to capture up to 5% of global Impact Investment AUM. 5% of this market would represent US$50 billion (GBP38.5 billion), which by 2020 could plausibly account for up to 10% of Guernsey’s net asset value of all assets under management.
Apart from providing for clients with an already existing interest in social and/or environmental causes, Impact Investment could generate remunerated economic activity amongst a number of players across the finance sector’s value chain, such as insurance companies, fund administrators, corporate service providers, law firms, banks, financial advisors, and wealth managers. Their expertise could create this economic value-add in Guernsey in direct correlation to increasing funds under management. Equally it could generate smaller sources of economic value-add as an exported area of specialist expertise, through advisory work to non-Guernsey domicile clients and structures. However, above all, in an increasingly competitive and restrictive offshore financial services marketplace globally, it is the opportunity to innovate and diversify Guernsey’s existing range of services that is the true opportunity on offer from developing an Impact Investment economy.
Definitely worth thinking about over Christmas if you ask me!
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