The Growth Of The Impact Economy

From international success stories to local startups, the impact economy is undoubtedly on the rise.

- Emma Hodgson

The term ‘impact economy’ has become somewhat of a buzzword in business circles in recent years. However, it was first coined more than a decade ago by the Rockefeller Foundation.

Back in 2007 a group of investors came up with the term “impact investing,” which was defined as “investments intended to create positive impact beyond financial return.” It was a clear step away from the traditional Corporate Social Responsibility (CSR) route which many businesses then – and continue – to take. Instead of donating a percentage of profits toward a charitable cause, the new system sees businesses inherently built with impact in mind. Ahmad Ashkar, founder of the Hult Prize and arguably the poster boy for the impact movement, describes it as “maximising shareholder value by achieving impact.” Impact businesses aim to operate as any other business (with consumer demand and profit in mind) but with the added factor of being anchored by how they impact the environment, humanity and the world at large. As such, these new types of businesses often attract investment from everyone from venture capitalists looking to invest in something worthwhile to philanthropic organisations.

Indeed, as concerns about environmental change and social challenges become increasingly prevalent, many see the impact economy as a middle ground which allows ethical business to thrive within a capitalist structure. “As social and environmental concerns are becoming increasingly urgent, entrepreneurs and companies are eager to generate business through the idea of “doing well by doing good,” explains Tatiana Antonelli Abella, the founder and managing director of Goumbook, a company which helps connect people and companies in order to enter the Middle East’s green economy.