Bringing the Power of Financial Innovation to Bear

Abstract

Given the massive need for investment in innovation and the magnitude of sustainable value creation opportunities, this chapter inquires into the implications for capital markets. It asks how the world of finance can be oriented toward consistently adding value to the real economy in ways that are useful to companies and the average citizen, while adequately compensating the cost of capital. It first discusses the trends that are disrupting finance, namely regulation, digitization and the Bitcoin virtual currency, crowdfunding and investing for impact including ESG investing. The chapter then defines the term impact investing, and discusses the size of the market as well as its return expectations. Given its still relatively small size, it then asks how impact investing market growth can be achieved in practice. Research activities for all chapters in Part IV included writing a baseline report commissioned by the UK Cabinet Office, and circulated to participants of the first-ever G8 conference on social investment held in 2013 under the UK’s Presidency of the G8 in that year.