Define. Align. Refine.

A framework to mobilize impact investing and strategic philanthropy for a better world

The white paper at a glance

  • Despite a growing acceptance of the need to transition to a more sustainable future, the level of funding needed to secure that transition is still falling far short of what is required and many of the most critical challenges remain unsolved.
  • We believe that one way to address that shortfall is to look towards the principles and tenets which underpin philanthropy and impact investing.
  • In this paper we explore the scale of the challenge, from the breaching of planetary boundaries to the urgent need to provide minimum social standards. We set out ways in which we believe we can borrow from the concepts of impact finance and apply them, at scale, across a broad range of stakeholders and capital pools to develop outcomes-oriented solutions designed to direct funding to where it is needed the most.

A conversation on measuring impact

In this conversation, we dive a bit deeper into impact metrics in an attempt to address the difficult question: How can investors have impact? Take a look at the discussion featuring Annabel Willder, Sustainability and Impact Institute, UBS, Sam Duncan, Co-Founder and CEO, Net Purpose and Tom Adams, Chief Strategy Officer, 60 Decibels.


Podcast

Monocle's The Bulletin with UBS Podcast on the power of impact investing and philanthropy

A discussion on the latest white paper released by the UBS Sustainability and Impact Institute.

The podcast

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Investment capital and coordinated action are needed to achieve a more sustainable future and avoid the worst consequences of global warming. Even as societal and investor focus increasingly swing towards prioritizing social and environmental outcomes, impact investing and strategic philanthropy remain too narrow in focus and modest in scale. The opportunity ahead is not only to drive more capital into these two approaches but also to apply the key features of these solutions – intentionality, outcomes focus, measurability, additionality – to transform other areas of finance and society. Our panel explains what this process could look like and why it matters.


Key takeaways

Financing the transition – challenges persist

While humanity may have become wealthier and healthier, with greater freedoms than ever before, inequalities continue to rise, social unrest is growing and many of our planet’s ecological limits are being breached.

Governments are offering help – assistance from the OECD’s Development Assistance Committee rose to an all-time high of USD 161.2 billion in 2020. Private capital is contributing - philanthropic donations have reached USD 1.5 trillion and are growing. But this is still nowhere near enough. The UN estimates that USD 5 to 7 trillion per year is needed between 2015 and 2030 in order to meet the Sustainable Development Goals (SDGs). But there is an annual funding shortfall estimated at some USD 2.5 trillion, a figure which the OECD believes has likely increased to USD 3.2 trillion during the pandemic. Faced with this yawning funding gap, private capital is increasingly being mobilized and directed toward combatting a whole host of economic, environmental and social ills that have either gone unaddressed by traditional finance or have been underserved by government and philanthropic initiatives. Yet nearly two-thirds of all assets under management still intentionally decline to take ESG or sustainability into account as part of the investment decision-making process. Furthermore, many traditional ESG investments fail to bring about any meaningful real-world change.

Impact investing and philanthropy: showing the way

We therefore believe a different approach is needed if we’re going to bring about the fundamental transformation required for a sustainable future. We argue that impact investing can offer the blueprint we need to frame that approach.

Impact investing has emerged as the next great frontier for both finance and development cooperation. While it represents a powerful force for positive change, it is still far too narrow in scope and too modest in scale to provide that USD 5 to 7 trillion per year of funding which the UN says we need if we’re to achieve the SDGs globally by 2030.

This presents us with an opportunity and an imperative – the scaling up of impact finance. This means not only driving more private capital into philanthropy and impact investing but also utilizing key features of these approaches to transform other areas of finance and society.

Scaling up the impact

Achieving tangible and lasting outcomes is going to take more than capital alone. Collaboration from all stakeholders is called for. From public policymakers, corporate decision makers, investors and consumers, a concerted and deliberate shift of intent will be needed.

So we are proposing a three step approach which employs systems based thinking to leverage the proven principles and tenets of impact investing and philanthropy across a broader range of capital pools and stakeholders. We summarize it as Define. Refine. Align

What’s key to this framework? Three things:

Visions

In our paper we featured ten global visionaries, these are Entrepreneurs and thought leaders working to achieve the 17 UN sustainable development goals. UBS supports them to scale their positive impact.

Diet Change, Not Climate Change

Green Monday, David Yeung, Founder and CEO

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Growing green bricks

Ginger Krieg Dosier, Biomason President & CEO

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Building outbreak resilience

Dr. Kamran Khan, BlueDot Founder & CEO

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Learn more about the UBS Global Visionaries