By Burak Dalgın and Ussal Sahbaz, EDAM Report

Impact investing is a very hot topic. From global financiers to academics, from successful entrepreneurs to development professionals, a diverse set of people talk about this relatively new phenomenon. Optimists hail it as the way to mend the rift between Wall Street and main street and a panacea for social issues that governments can no longer cope with. Pessimists see it as finance industry’s latest marketing gimmick to lure new clients or to “buy indulgences with the public”1. The reality is a bit more nuanced. We believe impact investing can indeed make a real difference in accomplishing sustainable development goals (SDGs), particularly in emerging markets2. 

However, meaningful challenges exist, as well. Just like emerging markets private equity has achieved over the past two decades, impact investing needs to develop capable teams, demonstrate track record and have long term backers to achieve scale and sustainability. This paper outlines seven potential ways for emerging markets to ride this wave.