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Denmark has an enormous, yet untapped potential for impact investing. If we realize the potential, Denmark can assume a global leadership role.
Amit Bouri thinks so. He is the co-founder and CEO of the world’s leading network for impact investors, the Global Impact Investing Network (GIIN). And he is in Copenhagen precisely to fuel development in the Nordic region.
“I see enormous potential for putting impact at the center of investment in Denmark,” he says.
I catch Amit Bouri at the Admiral Hotel during a break between more than 20 meetings in just two days with key players in the Danish investment environment.
Amit Bouri orders a cup of herbal tea and apologizes that his voice is hoarse. But the after-effects of a spring cold do not prevent him from talking excitedly about the impressions he has gathered in Copenhagen.
“If I have to sum it up in one word, it’s potential,” he says:
“You have a long tradition of sustainability. And I see some incredibly passionate leaders of large companies and pension companies who show an interest in playing a greater role in solving major global problems. So I think we will see a big transition of the market in Denmark.”
Skepticism among large investors
Denmark is not exactly a pioneering country when it comes to impact investing, I object. And Amit Bouri admits that to me.
But there is nascent interest, which goes hand in hand with a need for more clarity about what impact investing is and what opportunities it holds.
“We see some confusion and skepticism about impact investing. There is a need for clarification of what it is and what it can do,” says Amit Bouri.
Among other things, he has encountered the view that impact investing is not relevant for large institutional investors because it does not generate a sufficiently high return. He would like to correct that misperception.
“We have some of the world’s leading pension funds, insurance companies and companies in our network. They work very actively with impact investing without coming into conflict with their obligations in relation to returns,” says Amit Bouri and adds:
“Impact investing can be included in any type of investment portfolio. We want to say that loud and clear.”
Impact investing is becoming mainstream
The Global Impact Investing Network emerged from The Rockefeller Foundation in 2009 with Amit Bouri as co-founder. The network works to spread and scale up impact investment globally and is, among other things, behind the impact measurement and management standard IRIS+ and the nine principles for integrating impact into investments.
Today, GIIN has more than 448 members in 60 countries – including institutional asset owners, asset managers and large companies.
With his visit to Copenhagen, Amit Bouri hopes to accelerate the development of impact investing in Denmark – and to attract new Danish members.
“We would like to see impact investing become part of the way every investor in Denmark operates. And we can feel that the interest is growing. I have a hope that impact investing can become mainstream,” says Amit Bouri.
That it happens is necessary, he believes.
“If we are to solve the big, systemic problems such as climate change and global inequality, we have to ensure that capital flows in the directions where it can create an impact. And here I would like to see Denmark – and the other Nordic countries – take a leading role,” says Amit Bouri.
Impact investing is relevant worldwide
But why throw resources into the highly developed Nordic welfare states when investors can get more impact for their money in developing countries, I ask.
Amit Bouri does not buy that premise.
“Every society has its challenges. I am not the best at assessing what Denmark needs most. But I believe that there is a need to develop the Danish economy in order to create opportunities for everyone in Denmark and drive a transition to a more sustainable economy. And here, impact investing can play a role,” says Amit Bouri.
He adds that it is not up to GIIN to assess which needs are the most legitimate.
“In Africa, Asia and Latin America, investors can play a role in the provision of basic services such as housing, health and access to food. In Japan, which is a highly developed country with a sophisticated economy, they are looking at things like regional imbalances in development and dealing with the needs of an aging population,” says Amit Bouri:
“These are areas where impact investments can play an important role in a national agenda. And I think we can find various examples of that all over the world.”
Combination of green and social impact
In a global perspective, Amit Bouri sees increasing attention to social impact – with investments in, among other things, food, agriculture, health and financial inclusion.
And then he finds that investors are increasingly thinking green and social impact together – which is a development he encourages.
“Dis a growing recognition of the relationship between climate issues and social issues,” says Amit Bouri, mentioning that the climate crisis has a serious effect on the living conditions of some of the world’s poorest people.
Correspondingly, there are investments that can benefit the climate and the lives of people at the same time, highlights Amit Bouri.
One example is that up to a billion people live without access to a stable energy supply. This means that they burn whatever they can find to get warmth and food.
By giving them access to clean, safe and reliable energy, you can reduce their CO2 emissions and the pollution of the environment. At the same time, they avoid inhaling harmful substances, and electric light allows them to work after dark, and their children have the opportunity to study in the evening.
“By thinking in the interrelationships, we can construct investment portfolios that deliver positive social and environmental impact alongside financial returns,” says Amit Bouri.
Big investors can work systemically
For investors, there are also advantages in thinking in terms of both green and social impact, because they get a greater diversification of their portfolios, he points out.
“Although we need more renewable energy, there will come a time when too much capital is allocated to climate investments. It is therefore good that investors can see opportunities across asset classes. It will open the way for more capital to flow in the direction of impact,” says Amit Bouri.
And then he points out that large investors who already invest in different types of assets can take a systemic view of their investments.
“They can identify different intervention points across their investment portfolios and use their capital strategically to strengthen a coherent system,” says Amit Bouri.
And can you see it happening in Denmark, I ask.
“I absolutely can,” says Amit Bouri.
“You have some very sophisticated investors. And from that starting point, we can help speed up development so that they not only achieve the best financial result, but also the greatest impact.”
I say thank you for the interview and Amit Bouri shakes hands.
The next investor meeting awaits.
