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Humanitarian Investing to Provide Impact Financing to Address Crises

As the Scale, Duration, and Complexity of Crises and Fragility Grow, Humanitarian Investing Provides an Inclusive, Sustainable Model of Financing that Combines Humanitarian Impact with Financial Return

BOSTON—In collaboration with the World Economic Forum and in partnership with the International Committee of the Red Cross (ICRC) and the World Bank Group, Boston Consulting Group (BCG) is pleased to announce the release of a new white paper titled Humanitarian Investing—Mobilizing Capital to Overcome Fragility.

The paper outlines the role and initial landscape of humanitarian investing, which provides financing to address crises and fragility while seeking a return on that investment. By harnessing the growing pool of investment capital looking for a double bottom line, humanitarian investing also focuses on situations of conflict and fragility that are causing increasing flows of migrants and refugees.

There is a clear need to rethink humanitarian assistance. About 2 billion people live in countries that are affected by fragility, conflict, and violence, and, according to OECD predictions, by 2030 more than 80% of the world’s poorest people will live in such conditions. Climate change could bring internal displacement figures to 140 million by 2050, according to the United Nations Office for the Coordination of Humanitarian Affairs.

Seeking Purpose-Oriented Investment

Although the number of internationally led responses to crises doubled between 2005 and 2017, the current environment faces increasing pressures, and there are few investment opportunities for investors who are looking to make a difference.

Yet many more investors are seeking purpose-oriented investment options and emerging opportunities to bring together a new mix of partners to design long-term solutions.

Humanitarian investing acts as a market to match impact-driven investment capital to opportunities that enhance resilience, mitigate crises, or promote stability and recovery. The paper explores how this inclusive, sustainable financing model complements traditional humanitarian assistance, leverages development-financing instruments, and broadens the potential to use investment opportunities to tackle long-term challenges.

"We are challenging humanitarian and development communities, as well as investors and business leaders, to rethink their role in providing support and financial assistance to those most affected by fragility and crises,” said Borge Brende, president, World Economic Forum. “Humanitarian investing can unlock new capital and identify investable opportunities to support vulnerable communities.”

According to David Young, a managing director and senior partner at BCG, “There is a long history of creative financial innovation and visionary investors, and we are again at such a point where finance can make a constructive difference for millions at risk.”

What Humanitarian Investing Can Do

Humanitarian investing applies capital to investable opportunities that:

  • Directly affect and empower people exposed to fragility, conflict, and violence, as well as the ecosystems around them
  • Address the needs of the fragility-crisis cycle, from resilience to response to recovery
  • Are structured to take advantage of differences in mandates, return objectives, risk tolerances, and investment horizons
  • Bring together public and private partners, expertise, and capabilities
  • Generate collaboration guided by humanitarian principles of neutrality, independence, and impartiality
  • Help transform the efficiency of the humanitarian system
  • Measure and report on impact to humans plus financial performance

Humanitarian investing helps those most affected by fragile situations and crises by responding to their needs, ensuring their dignity and agency, addressing inefficiencies in aid and aid delivery systems, overcoming restrictions on the nature of aid given, and advocating for high-need communities.

“We must build on the current momentum toward addressing fragility, protracted crises, and forced displacement and develop new financial tools for people,” said Peter Maurer, president, International Committee of the Red Cross. “I see a real opportunity to bring development, humanitarians, investors, and business communities together to build inclusive, sustainable markets and harness capital to deliver impact and help those in greatest need.”

In the months ahead, the initiative plans to develop a collaboration platform, to continue working with key stakeholders to promote organizational readiness, and to form dedicated industry and regional tracks that will engage stakeholders to codevelop investable opportunities as proofs of concept that will enable future deal pipelines.

A copy of the report can be downloaded here.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

A propos du Boston Consulting Group (BCG)

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation—inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.

To succeed, organizations must blend digital and human capabilities. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures—and business purpose. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, generating results that allow our clients to thrive.

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