In July, several aid groups came together to tackle what the United Nations called the biggest humanitarian crisis since the end of World War II: More than 20 million people in 10 African countries were at risk of famine. Aid groups pulled together under the umbrella of the Global Emergency Response Coalition and went to work, backed by $1 million in matching donations from the PepsiCo Foundation and investment giant BlackRock (BLK) Inc. (BLK) Additional help came from large corporations such as Google and Twitter Inc.
One can easily see the role private capital plays in making a significant difference on the world stage. In the case of the African famine, a crisis was brought to light and large institutions mobilized to deploy capital. That essential help is heartening to see. But the root causes of issues like hunger, global inequality and climate degradation still remain and require much greater and sustained capital allocation if we are going to bring an end to catastrophic famines and other avoidable disasters. Current resources, while hugely valuable, are insufficient to address these systemic challenges.
The world is facing a host of slow-motion crises that only long-term planning and continued resource allocation will fix. These problems, targeted in the United Nations’ sustainable development goals, will require trillions in new capital per year. That sounds like a tall order.
But this number is not so intimidating when we take into account that many times that amount is invested each year, already working to deliver financial results. If investors broaden the targeted results of that capital to deliver impactful social or environmental progress alongside a financial return — the rapidly growing practice known as impact investing — then money of a scale capable of realizing the global goals will become available.
The case for impact investing, which has been practiced for decades and has really taken off in the past 10 years, has been made and proven. If all leading investment organizations began a concerted effort to dramatically increase their annual investment capital into impact investing, this could put the needed trillions to work each year focused on issues addressed by these ambitious and important global goals.