Impact investing reshapes the future of the GCC economy

Impact investing reshapes the future of the GCC economy

An article by Vikas Arora, Chief of Impact Investing at AVPN.

In the realm of investment strategies, West Asia (Middle East) has long been recognised for its dominance in traditional sectors such as oil, real estate, and finance, which have contributed to impressive returns and the creation of iconic skylines and bustling economic centers. However, a deeper examination reveals a significant shift towards impact investing, marking the beginning of a new era of positive change in the region's investment landscape.

The rise of impact investing signifies a departure from purely profit-driven motives to a more holistic approach that considers social and environmental impact alongside financial returns. This shift is evident in the region's sovereign wealth funds, which in 2023 boasted assets totaling a staggering $4 trillion, with Saudi Arabia's Public Investment Fund surpassing Singapore’s GIC in terms of deal activity.

Embracing innovation

The catalyst for this change is multifaceted. The Gulf’s burgeoning technology sector is emerging amid growing realisation that sustainable economic growth must be resilient to commodity fluctuations, amenable to a wounded environment, and adaptable to global digitalisation. Its emergence is not mere happenstance but a strategic response that has opened doors to new, non-traditional sectors like e-commerce, renewable energy, and healthcare.

In February,