Author: Arosio, Marco
Source: Responsible Research
Number of pages: 124
Interest in impact investments in developing countries has grown in recent years for a variety of reasons. First, the slow growth of OECD economies and the high positive correlation among them, as shown by the recent global financial crisis, have helped to shift interest towards the developing world. Second, the depletion of natural resources coupled with the rising demands of a growing world population will require more responsible and sustainable business practices.
In part, the wealth imbalances that characterise our world today are a result of flawed capitalist models and of historical events. Colonialism played an important role in focusing the benefits of economic activity on a restricted number of countries. Capitalism further concentrated wealth into the hands of a relative few. It is today clear that these models cannot guarantee an equitable and sustainable future for mankind, as existing economic disparities generate social unrest, increased violence and progressively make international peacekeeping efforts more challenging.
Impact investments offer a new approach in the way that they reduce the imbalance in the distribution of wealth between a company’s ownership and the community in which it operates, while at the same time being respectful of the natural environment and its resources. In addition, these structures are readily applicable in the existing economic system.