Impact investment becomes a "booster" for enterprises to go overseas. What is impact investment?

21st Century Business Herald reporter Lu Yueling reports from Hong Kong

Impact investing is bringing changes to the global financial industry. More and more funds hope to achieve positive impacts on environmental and social development issues while pursuing financial returns. Research institutions predict that impact investing worldwide is expected to maintain an annual growth rate of more than 18% by 2030.

What is the current trend of global impact investment? Where does the money for impact investment come from and where does it go? How can Chinese companies adapt to the requirements of corporate responsibility for impact investment when going overseas? At the 2025 Impact Investment International Forum held in Hong Kong recently, the guests discussed related topics.

Zhang Laiwu, chief economist of the South-South Cooperation Finance Center and former vice minister of China's Ministry of Science and Technology, said in an interview with a reporter from 21st Century Business Herald that impact investment is an advanced investment concept in the world, which can combine advanced concepts with my country's actual needs to better promote the "introduction" of foreign funds and the "export" of Chinese funds. At the same time, with the current decline in the activity of private funds, impact investment has also opened up new funding channels for us.

Bei Duoguang, president of the China Inclusive Finance Research Institute, said in an interview with a reporter from 21st Century Business Herald that China has made many contributions to impact investment, such as green transformation, new energy export, and transportation investment in the countries along the Belt and Road Initiative, but it has not used the concept of impact investment. It needs to actively connect with the international language and tell the Chinese story well. In the future, the guiding role of government-led funds, state-owned enterprises and other entities should be brought into play to drive more market forces to participate in impact investment practices.

Global impact investment is growing rapidly

"Impact investment" was first proposed by the Rockefeller Foundation in 2007. Compared with traditional financial investment, impact investment hopes to have a positive impact on the environment or society while pursuing financial returns; and compared with public welfare/charitable investment, impact investment still pursues reasonable financial returns. Therefore, impact investment is more like a compromise between financial investment and public welfare investment, trying to use market means to make up for the "market failure" problems caused by the pursuit of profits in the past (such as climate change, the gap between the rich and the poor, etc.).

The concept of impact investment overlaps with concepts such as ESG investment, social responsibility investment, and sustainable investment, but each has its own emphasis. Bei Duoguang, president of the China Inclusive Finance Research Institute, believes that ESG investment is mainly a requirement put forward by institutional investors in the secondary market to listed companies, which is passive for listed companies; while impact investment is mainly a demand from direct investors such as PE and VC, who actively hope to consider not only financial returns but also social and environmental demands when choosing investment projects.

At present, the main application areas of impact investment include agriculture, green technology, healthcare, education and even housing (such as affordable housing). Since each country faces different development problems, impact investment also has different focuses. For example, in China, investment related to green transformation (including energy, green technology, etc.) has developed rapidly, Japan focuses on investment in coping with the elderly, and African countries focus more on agriculture.

The scale of global impact investing is growing rapidly. According to the Global Impact Investing Network (GIIN) report "Impact Investment Market Size in 2024", by the end of 2023, the global impact investment market has reached US$1.571 trillion, a 35% increase from 2022 (US$1.164 trillion). Data shared by the Hong Kong Financial Services Development Council at this forum showed that in the past 12 months, the global impact investment market has reached nearly US$1.6 trillion, and in the past five years, the scale of impact investment management of survey respondents has increased by 14% annually. In Asia, the number of impact investors has increased dramatically in the past five years, from 124 in 2019 to 156 in 2024.

Where does the money for impact investing come from?

Where does the money for impact investment come from? Family office and hybrid financing are two frequently mentioned words. In the international market, family offices are the leading capital providers for impact investment. This is because family offices are more likely to have clear values and concepts of inheritance, and will give priority to impact.

Hybrid financing is composed of public finance, development financial institution funds, commercial bank funds, charitable funds, family funds, etc. Song Wei, a researcher at the Ministry of Commerce's Institute of International Trade and Economic Cooperation, pointed out in the article "Hybrid Financing - A New Model to Promote the Achievement of Sustainable Development Goals" that hybrid financing refers to the strategic use of public funds and charitable donations to mobilize private capital to participate in emerging and frontier markets, aiming to expand the scale of development funds and promote the sustainability of development aid projects. Li Xiaozhen, director of sustainable finance at the World Resources Institute Beijing Office, believes that the development of hybrid financing can help mobilize more private wealth for social welfare. Hybrid financing combines different levels of risk and return, and is an important tool for solving the financing gap for industries that have a greater social and environmental impact.

Bei Duoguang believes that many national strategies currently proposed by my country, such as rural revitalization, common prosperity, and the "dual carbon" strategy, are very consistent with the goals of impact investment. In the financial field, my country has proposed green finance and inclusive finance, but it is still mainly government-led. Bei Duoguang believes that Chinese companies are still in their infancy in the practice of impact investment. In the future, they should play the guiding role of government-guided funds, state-owned enterprises and other entities, leverage more market funds to participate, give play to the role of efficient allocation of market funds, and better promote the development of green transformation and rural revitalization.

Does impact investing require sacrificing financial returns?

A key challenge facing impact investing is that people generally believe that it means giving up financial benefits. Zhang Laiwu believes that although impact investing has developed rapidly, there is a "seesaw effect" between financial benefits and social and environmental benefits. It is often necessary to give up certain financial benefits to obtain social benefits. This means that the growth of impact investing will face bottlenecks, which must be solved from the theoretical and practical levels.

Zhang Laiwu believes that digitalization is the key tool to solve this constraint. "Humanity has moved from industrialization to digitalization, and has ushered in a historical opportunity to solve this dual constraint." On the theoretical level, Zhang Laiwu believes that traditional economics is an industrialized mindset, and capital must be profit-seeking. It is an economic theory centered on "things"; while the economic theory in the digital economy era is an economics centered on "people". People's emotions, dreams, and experiences are rigid needs. It takes human experience value as the core, not a single product as the core. If an enterprise can meet this spiritual demand, it can not only save the original business benefits, but also bring benefits to the second circle. On the practical level, data elements can replace labor elements and capital elements to achieve intelligence and sharing. Therefore, it is feasible to take people's experience value as the core as a business model, and the development of artificial intelligence today proves this. With the empowerment of data elements, it will bring new wealth appreciation of productivity, and it can also generate additional income because of the spiritual value attached to the goods. "Dong Yuhui sells agricultural products, which is a new experience value. Dong Yuhui's knowledge and feelings touch people's hearts and create value realization. Such a new mainstream will bring new wealth." Zhang Laiwu said.

Has impact investment become a “booster” for companies to go overseas?

Why do companies need impact investment when they expand overseas? What role does impact investment play in helping companies expand overseas? Bei Duoguang believes that companies need to change their previous concept of relying on low-cost advantages to gain market share as soon as possible, and need to invest more energy in managing the social impact of the company in the local area. "Low cost and cheap goods used to be advantages, but some recent cases show that not paying attention to social impact may bring a negative effect."

Wu An, senior program director at the Chinese Business School of the University of Hong Kong, believes that impact investment is a booster for supply chain going overseas, which is particularly important at present. If companies ignore the interests of the country where they are located, it is easy to bring an impact on the company's sustainable development in the local area. When companies go overseas, they must not only investigate local market demand, but also "adapt to local customs", respect local cultural identity and habits, and think about what kind of contribution the company can make to the local community. Wu An believes that influence may not necessarily be directly reflected in the help to the company's business, but if there is no drive from impact investment, then the company's preparation in terms of talent and culture is insufficient. Therefore, impact investment not only helps companies build a good ecological environment abroad, but also builds the maturity of companies in the global market.

New energy is an important area for Chinese companies to go overseas. In terms of impact investment practice, Zhang Jie, vice president and secretary general of the Energy Investment Professional Committee of the China Investment Association, said that the construction of zero-carbon bilateral industrial parks is becoming an important model and tool for new energy overseas impact investment, which will promote the construction of green energy and sustainable development in the countries along the Belt and Road. Zhang Jie believes that first of all, zero carbon is a kind of impact investment, which is done to cope with climate change. Secondly, "going out" in the form of parks can, on the one hand, enter overseas markets through a group approach, which can better cope with risks. In this process, NGOs can be used to understand what the local community needs and obtain "soft support" from capacity building, top-level design, laws and regulations, and related investment and financing. On the other hand, the park model contributes the most to local GDP growth and industrial development, and is more popular with local governments. Zhang Jie believes that when a zero-carbon park is implemented, it is necessary to solve the problems of energy infrastructure, transportation infrastructure, and building infrastructure in the park. These three were traditional infrastructure in the past, and in the future, a new investment model must be reshaped to achieve zero-carbon infrastructure.

It is reported that this forum is co-organized by five institutions, including the Financial Center for South-South Cooperation, the Hong Kong Foundation of the China Inclusive Finance Institute, the United Nations Global Innovation Center on Climate Change, the United Nations Industrial Development Organization Shanghai Investment and Technology Promotion Center, and the World Federation of Small and Medium Enterprises.