How Concerns about Sustainability Came into Focus and Its Effects on the Growth of the Impact Investment Market

The role of sustainability has been a trend for quite some time and will most likely continue to be an everlasting trend, but where exactly did the concept of sustainability come from? In 1987, sustainability became recognized from a book that was published by the World Commission for Environment and Development (WCED) called Our Common Future.4 This book gave the world the definition of sustainability, which stated it is “a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations.”4 The popularity of sustainability grew as more and more books and various amounts of studies were conducted from the effects that it potentially had. Corporations were the main focus of this issue at the time and remain to be the focus since it is believed they have the most power to make sustainability a reality, which brings the birth of impact investing.

While impact investing is relatively new in terms of popularity, it has become more popular based on the financial return that comes with the impact investment. A report written by J.P. Morgan in 2009 predicted that impact investing has the chance to accumulate about one trillion dollars in the next decade.5 Unlike regular acts of sustainability, impact investing is mainly aimed at generating return that will promote a positive environmental and social change, such as in underdeveloped parts of the world as well as financially neglected communities.5 This focus can be a downside to impact investing because it requires a large amount of investments from enterprises or individuals who are willing to take on the risk in order to achieve success.3 However, the effects of impact investing would solve some governmental issues that involve funding the wealth inequality gap between the rich and the poor.1 While the downsides could in fact stunt the growth of impact investing in the future, the upsides could equally allow the opposite to happen as well.