New Guiding Principle: Classifying enabling technologies as impact investments
Enabling technologies are technologies that enable other sectors or industries to reach impact at greater scale. These enabling technologies eliminate or reduce a clearly defined obstacle that hinders impact at scale. Let us give you a few examples. If charging times and charge duration (range) are main obstacles for electrical vehicles to be adopted at scale, then fast charging batteries could be defined as an enabling technology. If the lack of relevant data is the main reason why we overconsume energy in residential buildings, then a software that provides us with data we can act on would then be an enabling technology. If the main reason why mental health issues take so long to cure is that we don’t discover mental illness early enough, then an efficient screening methodology would be an enabling technology.
Enabling technologies do not create impact themselves. They create better conditions for others to create impact. If enabling technologies free up time, reduce cost or provide information, someone else have to act on this and do something with the freed up time, the increased available financial resources or the data.
Directing capital to organisations that create true impact is key to solve our societies’ biggest challenges. Investing in enabling technologies is just as important, if it can be proven that these technologies really do enable impact at greater scale.
The Swedish National Advisory Board for Impact Investing believes that investments into enabling technologies should count as impact investments and that companies providing these technologies should count as impact companies. However, the measurable outputs that these investments and organisations deliver (reduced time, reduced cost, improved data etc.) is not to be considered impact.
Our Guiding Principles are always work in progress. We will continue to refine them as the knowledge and experience in the impact space grow. We welcome feedback from users of the Principles and we actively seek thoughts and suggestions from users.
This Guiding Principle was last updated on January 18th 2022, and represents, in our opinion, the best approach to classifying enabling technologies on the impact scale.
We hope you will find this framework useful in your impact strategies. Please do not hesitate to send feedback, thoughts and questions to our Secretary, Jenny Carenco: firstname.lastname@example.org.