Impact investment can make a positive difference - Alastair Davis

When SIS Ventures launched just a few years ago, impact investment as a category was still very much on the fringes – an emerging asset class still not on the radars of many investors. Fast forward to 2021, the market has reached roughly $715 billion in assets under management, according to the Global Impact Investing Network (GIIN). In short, impact investment has finally hit the mainstream, underpinned by several major economic shifts.

Alastair Davis, CEO of Social Investment Scotland and co-founder of SIS Ventures

First, we know that issues such as climate change, racial injustice, poverty, and support for under-represented groups have been posing problems for governments for many years. We also know that there is a huge funding gap in meeting the UN Sustainable Development Goals by 2030. However, arguably the biggest trigger for the growth of impact in business has been the global Covid-19 pandemic which has shone a light on the need for business to play a bigger role in helping to address society’s biggest challenges.

Cue the rise of business with a mission and/or purpose. While shareholder capitalism has enabled much progress for the way we tackle some of these issues, it has at the same time struggled to address many of other challenges – primarily due to the demands of meeting immediate shareholder expectations for returns.

Yet when companies fully leverage their scale to create a positive impact on society or the environment, the benefit can be significant. The pandemic has been a case in point. Many businesses have risen to the challenge at a time when society has been most in need, whether through industry collaboration to accelerate vaccination development and production, or through businesses pivoting to supply hand sanitiser and PPE to meet unprecedented demand.

Trojan Energy's charge point technology

Operating within this new economic reality, SIS Ventures now has an opportunity to take a leading role in both supporting innovative mission-driven business ideas and attracting the capital to be able to make a real difference.

To date, we have invested in a portfolio of eight businesses, all focused on making a significant social or environment impact. One of these businesses is Trojan Energy, established with the aim of ensuring everyone benefits from the energy transition. With a strong focus on enabling the uptake of renewable energy, Trojan Energy developed the Trojan EV Charging System. This system deploys a lance technology that can be removed when not in use, benefiting vehicle owners without driveways, pedestrians and councils. Its technology has the potential to have a major impact on meeting carbon reduction targets, by accelerating the roll-out of infrastructure which will enable greater use of electric vehicles.

As we look ahead to COP26 later this year, ensuring that we support innovators such as Trojan Energy is absolutely crucial if we are to meet ambitious goals for net zero and sustainability.

That’s why SIS Ventures is also involved in a project helping to fund some of the great business-led social solutions emerging from higher education. As the fund manager of Impact 12, SIS Ventures is working with twelve universities from across the UK to accelerate the development and success of impact-led social ventures spun out of universities. It will support social ventures with innovative finance tailored to their needs, including equity investment and debt. The fund will also provide access to timely and expert mission-aligned finance and impact support.

While we all continue to grapple with the bigger issues facing our societies and economies, we should be confident and optimistic that the emerging wave of mission-driven businesses can play a huge role in making the world a better place in which to live, work and play. As impact investors, it is our duty to ensure that there’s an amply supply of financing to support their ambitions. With supply and demand working in concert, we’ll be seeing and hearing a lot more about mission-led business in years to come.

Alastair Davis, CEO of Social Investment Scotland and co-founder of SIS Ventures