For most of us, the coronavirus pandemic is the first truly global crisis of our lifetimes. But while signs of progress against the virus have emerged from parts of Asia and Europe, infections and virus-related deaths continue to climb in the United States, and it seems as if large parts of the Global South are still in the early stages of their infection curves.
Our extensive webs of human connection are the proximate cause of the virus's rapid spread around the globe, highlighting, like nothing in recent memory, our global interconnectedness.
Ironically, those same links are also critical to the solution to the problem.
Across the impact investing community, COVID-19 is prompting a global response that those of us in the impact investing community have been proud to witness. Impact investors are doing what they do best: leveraging the power of finance to address the world's biggest challenges. It is already becoming clear that the ripple effects of the pandemic intersect with many of the goals impact investors have focused on for years: broadening access to affordable health care and housing, creating quality jobs, and building more sustainable agriculture and energy systems.
Among the hundreds of member organizations in the Global Impact Investing Network, tangible actions aimed at changing the course of the pandemic are unfolding. At the GIIN, we see those actions falling into three primary phases: a response phase, with a focus on immediate health and financial needs; a recovery phase, with a focus on rebuilding and tackling the social and economic impacts of the pandemic; and a resilience phase, with a focus on long-term systems change.
In many cases, impact investors are adjusting financing terms for existing investees as a first and immediate response. By making debt repayment terms more forgiving, impact investors are ensuring that social and environmental enterprises can continue to provide critical services — even as many struggle to overcome virus-related cash crunches.
Many impact investors also are offering bridge loans to their investees. Such loans are meant to help businesses cover expenses like payroll, rents, and other operational costs until emergency government aid arrives or consumer demand revives. Others in the GIIN network are expanding microfinance eligibility criteria and loan size, while still others are actively seeking out new investments that can help the world address the global public health emergency — proving, if nothing else, that not all liquidity has dried up.
Development banks across nearly all continents are issuing new bonds at a rapid clip. The proceeds will finance projects with broad COVID-related impacts. These projects are focused on things like improving the efficiency of healthcare systems, supporting the unemployed, and reducing friction in disrupted supply chains.
While we expect the near-term response by impact investors to the pandemic to grow in volume, actions by development finance institutions indicate that many in the impact investing community are thinking a step ahead to the medium-term investments needed to address a host of issues, including global under- and unemployment and inadequate health care, during the post-pandemic recovery phase.
As these efforts take shape, a central theme is becoming clear: in order to be truly effective, the global post-pandemic recovery will require the full spectrum of capital — from philanthropic to commercial. As things stand, we are seeing signs that blended-finance structures — long noted for their potential to bring different types of investors together to address urgent challenges — could rise to a new level of prominence. Such structures use philanthropic grants or concessionary capital to reduce investors' risk and catalyze the entry of larger pools of market-rate-seeking capital into investments with the potential to drive deep impact.
Just as we need to rely on one another more than ever during this crisis, we also need investors and grantmakers to work together as never before. But as we work together to respond to and recover from the impacts of the coronavirus, we must not lose sight of our longer-term goals. The crisis is laying bare deep inequities in our healthcare and financial systems and causing the most harm to those who were already the most vulnerable: the poor, the ill and elderly, minority communities, women and girls. As we strive to become more resilient in the years after the crisis has passed, we must do everything in our power to prevent those inequities from taking hold again.
Our collective efforts over the coming months are likely to shape the way we approach the biggest global challenges we face for decades to come — challenges such as the climate emergency, which, like COVID-19, ignore international borders.
As you begin, in the coming months, to chart your "new normal," I urge you to remain mindful of that broader perspective and to hold tight to a shared vision of a more just, equitable, and resilient future — and to invest in it.
Giselle Leung is managing director of the Global Impact Investing Network.