Over the next few years, the private sector will inherit the enormous responsibility of sustaining the health of our planet. Although this daunting challenge may force companies to operate outside of their comfort zones, businesses should recognize that with great responsibility comes great opportunity. In a market where consumer attitudes and brand loyalties are shifting to prefer socially and environmentally conscious products, companies hoping to remain competitive must integrate sustainability into the core of their business models.
One industry that has already embraced the power of sustainable growth is the blue economy. This economy relies on profits being derived from the ocean “in a context where environmental considerations and principles of sustainable natural resource management” are prioritized. Such financial gains can be made from the development of new technology to combat illegal fishing, the creation of biodegradable products to replace plastic waste and the reduction of carbon emissions to combat rising ocean temperatures. Coral Vita is an example of a Millennial startup that is contracted by hotels and governments to solve one of the blue economy’s most pressing threats: restoring the US$30 billion coral reef industry. By growing resilient corals and transplanting them into degraded sites in the most vulnerable areas, this company is working to prevent the anticipated death of 75 percent of all reefs by 2050.
Educating the next generation
Just last year, Mark Zuckerberg’s foundation made a sizeable commitment of US$45 billion toward impact investments. Additionally, well-respected organizations such as the MacArthur Foundation, Bain Capital and Goldman Sachs are now launching impact funds, further fueling the amount of capital available for sustainable companies. However, there still exists an education gap responsible for leaving untapped impact capital behind. In the attempt to make the impact investing industry a mainstream concept, corporations, governments and NGOs must take the lead and launch extensive impact-investing education campaigns. A World Economic Forum study found millennials from 18 different countries to believe that the main priority for any business should be “to improve society.” Although profitability is the key indicator for the success of a business, it is important to note that impact metrics matter equally to millennials. Evidently, my generation’s beliefs transcend industries and continents. We do not need to be convinced about the benefits of impact investments but do have to be educated about our ability to use personal finances to affect social and environmental change. Millennials have to become aware about the breath of impact investing opportunities that exist; from choosing an ethical bank such as Aspiration, to investing in a community note through an online platform, there are a variety of investment products that are easily accessible.
Increasing seed funding for social enterprises
According to the GIIN Impact Investor Survey, “shortage of quality deals with a track record” continues to be one of main challenges facing the impact-investing sector. While demand for impact investments continues to grow, the number of viable companies continues to fall short. Currently, only 9 percent of impact investments are being allocated to the startup or venture stage, while 90 percent of investments are being directed at post-venture stage enterprises. To counteract this economic imbalance, we need to encourage traditional companies to adopt sustainable business models, but also to increase startup funding for sustainable enterprises. With a higher percentage of Millennials choosing entrepreneurship as a career path, there exists an influx of young visionaries building consumer products and developing sustainable solutions waiting to be scaled. Only by creating supportive entrepreneurial communities through incubators and accelerators, and allocating seed capital to fund these ventures, will we meet the demands of impact investors by supplying a diverse portfolio of socially responsible companies.
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Without a doubt, impact investing is the strategy my generation has chosen to make a direct, tangible impact in our world -- both as investors and entrepreneurs. But to reach our full potential, we will need seed funding to scale our ideas and will look to traditional companies to adopt sustainable practices. It is only then, when the worlds of innovation and tradition fully integrate, that the health of our planet will be sustained.
This post first appeared in Huffington Post.