A Powerful Combination of Tailwinds Powering Impact Opportunities
The rise in inflation and consequent interest rate movements have led to a re-adjustment across the industry. Despite the broader slowdown, we’ve seen continued growth in climate solutions where the combination of an increase in public awareness, corporate action and government policy have resulted in growth – both in the supply of investment opportunities and the demand for solutions. We’re also seeing a maturing landscape, with investment flows into climate solutions no longer dominated by early-stage capital, which becomes less feasible as a funding source as companies scale. Perhaps most importantly, we’re seeing a great influx of talent into climate investing, which is unsurprising when you think of climate change as the defining challenge and opportunity of our lifetime.
Looking beyond climate, we also see compelling opportunities in education and workforce development, from both a return and social impact perspective. Education represents one of the three largest sectors globally in terms of consumer spending and one that is experiencing a great deal of change. We’re seeing a pickup in on-the-job training which is leading to an increase in apprenticeships and innovative risk-sharing models for financing education, and other innovations are leading to improvements in access, quality and affordability – all key to socio-economic mobility.
Opportunities in private markets
Overall, across sectors, we continue to believe that private markets are where the opportunity set remains most compelling because that’s where most of the innovation is and also because of the size. Public companies are the tip of the market iceberg, with private markets representing 88% of companies with revenues over $100 million, a number set to grow as private companies are increasingly staying private for longer.
Against this background as we look ahead, we believe that we can expect to see an increasing mobilization of capital into impact strategies and that private wealth will play a key role in this allocation. While traditionally we saw a separation of investment activities and charitable giving, today we see a confluence of strategies, where our clients are now looking for investment strategies that can potentially deliver financial returns alongside positive social and environmental outcomes.
Rick Barragan is the Managing Director,
Los Angeles Market Manager, for J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
Source: J.P. Morgan Private Bank, July 3, 2024 A Powerful Combination of Tailwinds Powering Impact Opportunities By Carlotta Saporito, Head of Impact Investing, J.P. Morgan Private Bank
