The world of impact investing, where financial return aligns with positive environmental and social outcomes, is rapidly growing. To shed some light on this exciting field, we got together with Venkata Gandikota, a leading expert.
He’s a Visiting Fellow at Cambridge Judge Business School and Co-Founder of Innofrugal, a non-profit global organization that holds conferences to gather public and private sector actors to discuss the ins and outs of climate and impact investing. His background in environmental engineering fuels his deep commitment to tackling climate challenges and supporting impactful initiatives, particularly through startups and investment. We were thrilled to gather his insights, honed over two decades, and share them with you.
Impact vs. climate funds - what's the difference?
Mr. Gandikota clarifies the key differences between climate and impact funds. While both aim to create positive change, climate funds tend to focus on environmental metrics (KPIs) like carbon reduction. Impact funds, on the other hand, take a wider range of social and environmental aspects into account.
A careful approach to portfolio building is necessary for successful climate and impact investing. Gandikota highlights how important it is to find opportunities with long-term, sustainable effects, conduct thorough risk assessments that take governance, social, and environmental (ESG) factors into consideration, and strike a balance between impact and risk across a range of sectors and geographical areas.
Building a strong foundation for your fund
For new teams that are venturing for the first time, Gandikota underlines the importance of a solid foundation. This entails setting clear goals, understanding market dynamics, and assembling a diverse and capable team. A strong impact thesis, coupled with stakeholder engagement and regulatory awareness, forms the bedrock upon which successful funds are built.
Challenges and opportunities in climate and impact fund
However, the path is not without its challenges. Mr. Gandikota acknowledges the hurdles faced by newcomers, ranging from navigating regulatory frameworks to securing funding and grappling with the complexities of impact measurement. Yet, he remains optimistic, urging teams to leverage established frameworks, engage in transparent reporting practices, and remain vigilant against greenwashing.
Despite the challenges, exciting opportunities will also lie ahead. Venkata identifies the potential of green technologies, the power of artificial intelligence (AI), and exploring niche segments within the climate and impact landscape. He envisions a future where such efforts become the norm, driving tangible societal and environmental benefits while generating financial returns.
Call to action: embrace the transformative power of impact investing
In closing, Gandikota points out the transformative potential of impact investing. He encourages patience, resilience, and unwavering dedication to the cause. As he says, the future of our planet and society depends on it. This is a call to action for all who share a vision of positive change – consider venturing into the world of climate and impact investing!
Empowering impact investors:
In addition to his insights, Venkata has generously provided a free, downloadable fundraising template specifically for climate finance and Impact investing teams. This resource offers a step-by-step guide and key sections to craft a compelling pitch. You can access the template from the link above.
ESG in venture capital and private equity
While there are more recommendations than united policies, environmental, social, and governance (ESG) reporting has become an important part of measuring investment opportunities. ESG adds transparency and evaluates the portfolio company's long-term sustainability, social impact, and ethical practices alongside traditional financial metrics. However, ESG reporting is not without its challenges, that come from data collection complexities and compliance hurdles. Gladly, we have a suggestion on how to tackle these challenges.
Easy data collection with Zapflow's ESG reporting tool
Zapflow’s integrated solutions tackle many of the common obstacles faced in ESG reporting. By consolidating ESG reporting with essential portfolio data, you can streamline processes, reduce inefficiencies, and enhance accuracy. Zapflow’s ESG surveys simplify data collection, ensuring validation at the point of entry, and offering flexibility tailored to your business needs. A flexible survey structure also allows customization to capture your unique ESG needs accurately. Security is also paramount, therefore Zapflow implements robust authentication options and access controls, safeguarding sensitive data against breaches.
Are you ready to transform your ESG reporting? Zapflow can be your partner in sustainability streamlining your efforts and ensuring compliance with ease. Book a demo with us.
