Opinion: How the impact movement can help rebuild Ukraine and beyond

The Russian war in Ukraine has inflicted significant challenges around the world. Food, fuel, and fertilizer hit record prices and surged inflation. Governments are still struggling with COVID-19, depleting treasuries, and expanding debt. Even before the war, the World Food Programme estimated that 276 million people globally were facing acute hunger, while 1.5 billion people could only afford the essentials. The United Nations Development Programme estimated that 82 low- and middle-income countries could be classified as “highly debt vulnerable.”

For high-income countries, these challenges will be painful and could cause unrest. In emerging economies, it will be about survival and possible political upheaval and violence.

There will always be some winners among the pain — countries with food to sell and fuel to supply. There will also be some glimmers of light, mainly if the U.N.-Turkey treaty allowing the shipment of Ukrainian grains is successful. Even so, the challenge will persist for at least the next two years, as Ukraine cannot sow as much seed for the next year amid war.

So what can the Global Steering Group for Impact Investment, or GSG, and others do to help — globally and for Ukraine?

Food

Let’s start with what we can do to help quickly: food.

Action on food is about the farm and beyond. At the farm, drones fitted to spot where fertilizer and water are most needed can reduce waste. Agritech is a rapidly growing field whose value is expected to soar from $17.4 billion in 2019 to an estimated $41.2 billion by 2027, but more of that investment is needed in emerging markets.

The broader field of agriculture extends to distribution, storage, waste reduction, and often lengthy supply chains, where investment in emerging economies could have significant benefits.

Some of these areas, such as building new storage, take time; others, especially tech initiatives, come online quickly. Venture capital investors can fund the rapid development of agritech, which will be essential. Sustainability-linked bonds can incentivize waste reduction. The Digital AgriHub, in partnership with the GSG in Netherlands and others, focuses on scaling up and investing in digital agricultural innovations.

Refugee and asylum-seeker support

With nearly 90 million people worldwide forcibly displaced, refugee challenges are highly diverse. Turkey hosts nearly 4 million refugees and asylum seekers, 3.6 million of whom are from Syria. Displaced Ukrainians, primarily women and children, have found open doors across Europe. But millions of people from Syria, Venezuela, Afghanistan, South Sudan, Myanmar, and elsewhere have been forced into camps or to eke out an existence on the streets.

Aid agencies struggle to support the basics. What can impact investing do to help?

Primarily, invest in creating jobs and enterprises. The Refugee Investment Network, for example, is building a refugee-centered investment ecosystem and supporting ventures through partnerships, advice, education, and finance.

For many refugees and asylum seekers, temporary living situations become informal settlements or slums. The GSG has launched “Informal Settlements – No Longer Invisible” to detail how to scale up capital mobilization to fund slum-upgrading programs globally.

Fuel

The war in Ukraine has led to skyrocketing fuel prices, and several countries are planning to reopen old oil fields and coal mines. This is an emergency response with consequences — it will increase the climate crisis.

Some environmental, social, and governance, or ESG, funds are bringing oil and gas back into their investment portfolios or increasing the amount already on their books. At the same time, we can expect an acceleration of green energy investment, driven by cost-effectiveness and resilience, as countries seek to diversify supplies and focus on domestic opportunities.

Some clean energy approaches take time, but others can be quick. Biogas has significant potential as a technology to enable energy access, improve the economic returns to smallholder farming, address climate change, and mitigate health concerns.

For example, Sistema.bio is a social enterprise that manufactures, markets, and sells bio-digesters to low-income farming communities in Central America, East Africa, and South Asia. Bio-digesters, which take organic waste and transform it into renewable biogas and organic fertilizer, are likely to generate significant savings in the long term. Still, the high upfront cost and the limited liquidity available to smallholder farmers mean that price is a deterrent to widespread adoption. This is a significant opportunity for impact investors and for farmers.

Aid agencies and impact investors are already working on the ground, but deepening and overlapping crises demand more. From small- and medium-sized enterprise finance to bond issuance at a significant scale, from technology to standards, the impact movement is helping to address global challenges today and beyond.