Impact Investing

 

Why Impact Investing?

We define impact investing is an investment strategy that seeks to generate market-rate returns or more, while investing in businesses that deliver tangible positive environmental impact or social benefit. It is becoming clear that governments alone cannot meet the challenges set by high poverty and unemployment rates, rapidly growing populations, rising food and energy prices, insufficient health care, environmental degradation and other major concerns facing developing countries.

Private Sector Involvement

Small and medium enterprises are often the primary source of employment, social impact and economic growth in emerging market countries. Yet financial institutions lend an insufficient portion of their balance sheets to this sector. Increasingly, social impact investors are stepping in to bridge this funding gap.  Social impact investors believe that they can play a part in shaping the future by deploying capital to this sector in an innovative, proactive and socially responsible manner.

Who is investing for impact?

Investors who know that social enterprises can harness market forces to generate profits while addressing social and environmental concerns. These investors are familiar with the concept of patient capital and are prepared to invest for the benefit of future generations. Such investors include individuals, institutions, foundations and development finance institutions.

Policy and Objectives

Northlight Partners supports social entrepreneurs and their businesses. They share our belief that behaving in a socially and environmentally responsible way makes good business sense, increases efficiencies and reduces long-term costs. Our primary objective in this part of the business at Northlight Partners is to help businesses deliver strong growth and sustainable financial returns for their investors while achieving maximum social and environmental impact.

Geographic and Sector Focus

Northlight Partners’ main geographic areas of focus are Eastern Africa and North Africa, as well as Asia.  We seek to diversify among five principal sectors: education, health, food and agriculture, community development, and poverty alleviation.

Impact Investment Process

At Northlight Partners, we have developed a proprietary process for assessing the impact achieved by each portfolio company. This process builds on the best practices and methodologies available to date, such as the Impact Reporting and Investment Standards (IRIS). Our process enables us to set financial and impact objectives and to report clear results to investors.

Northlight Partners’ Social Impact Objectives

We have identified six key objectives for social and environmental impact that are integral to our strategy.

  1. Job creation to drive poverty alleviation
  2. Increasing scalability and reach of portfolio companies
  3. Capacity building and empowerment of social entrepreneurs
  4. Improving governance, accountability and employment practices
  5. Provision of health, education, water, energy and community services
  6. Conservation and management of natural and water resources