Remember when the G8 Social Impact Investing Forum seemed like a defining moment for impact investing on the world stage in 2013? Or when Barack Obama’s proposed 2012 budget earmarked up to $100 million for social impact bond pilot schemes in 2011. Every year since the last financial crisis, investors have proclaimed a watershed moment for the impact investing movement.

Last fall’s news included the Senate of the G7 economy Italy deciding to recognize benefit corporations—the first country in the world after the United States to do so. And welcome new guidance from the US Department of Labor acknowledges that there may be a direct relationship between the economic and financial value of an investment, and environmental, social, and governance factors. The fact that fiduciaries can now use these factors in their analyses of competing investment choices could help fast track impact investing in the world’s leading capital market.

This is also urgent: Our society faces a politically and economically collapsing Middle East, increasing environmental destruction, and other intensifying threats, and we need to achieve faster progress. In the big scheme of things, impact investing is still a niche activity. But last year, 146 Global Impact Investing Network members reported $60 billion in invested assets in 2015, and 1,380 Principles for Responsible Investment signatories reported assets under management of more than $59 trillion. This suggests growing awareness about responsible investment.

If impact is to become the third dimension against which we screen every investment—next to risk and return—it’s just like the treadmill in the gym: It’s about running fast enough, and long enough. Fortunately, we have four opportunities to source massive amounts of fresh investments across different asset classes and geographies to make 2016 count.

First, the United Nations climate conference COP21 confirmed that the $4-6 trillion energy industry—the world’s number-one polluter—will have to gradually decarbonize. But making fossil fuels more expensive and redistributing carbon taxation revenue to clean energy is not good enough. Clean energy also needs to become much cheaper. The new, long-term certainty provided by the Paris climate accord opens up a promising opportunity to step up investments in clean energy research and development (R&D)—as proposed on COP21’s opening day by Mission Innovation and the $2 billion Breakthrough Energy Coalition. Impact investors willing to take a longer view, and act as the go-between for government R&D and classical venture capital (with its short-term investment horizon) have a contribution to make here. By accepting to trade off risk, return, and possibly liquidity for impact, they can help “oil” investments on the demand and supply side of the clean energy ecosystem (pun intended). The International Energy Agency estimates that to achieve a long-term target of 450 parts per million (ppm) carbon dioxide in the atmosphere (typically regarded as a proxy for keeping mean global temperature by 2100 to no more than 2°C above pre-industrial levels), $7.3 trillion is needed for investments in renewables, nuclear, and biofuels between 2015-2030, and $11.2 trillion for end-use energy efficiency in transport, buildings, and industry.

Second, impact investors can help provide the kind of financing needed to sort out the world’s long, complex, and often unethical supply chains.

Following the success of organic agriculture standards and the fair trade certification movement since the 70s and 80s, the number of voluntary sustainability standards has exploded. In January 2016, Ecolabel Index tracked 463 ecolabels in 199 countries and 25 industry sectors alone—and that’s not counting social performance standards. Corporate commitments to sustainable procurement are growing, and standards help drive sales of certified products. But standards often impose high compliance costs compared to the heuristic insight they provide. It’s not easy, for example, to assess whether a corporate communications department is rightly celebrating its ethical trading, or in fact remains stuck in environmentally and socially unsound sourcing practices. To get a sense, it’s worth asking whether companies’ reporting standards rely on self-reported information, or only test end-products so that a potential heavy impact of, say, chemicals in the manufacturing process, remains hidden.

Unlike with renewable energy, most environmentally friendly machines and production processes do not require an R&D job. In many labor-intensive supply chains stretching to emerging markets, technical solutions to improve social and environmental performance exist. Poor environmental and labor conditions at the manufacturing stage are the consequence of offshoring to reduce cost. Consider the benefits of treating wastewater, which we take for granted in industrialized countries, but which is often the exception in emerging markets. When deployed, best available technology can often achieve such high resource savings and efficiency improvements that it simply needs innovative financing to be rolled out. (I was able to confirm this in our research on creating sustainable value chains in the textile and garment industry, the world’s number-two polluter.) The typical South Asian textile and garment factory, for example, could save up to 20 percent of chemical inputs, 40 percent of energy, and 50 percent of water in their wet-processing operations—improving the environmental footprint without raising unit cost and with some productivity measures also achieving better working conditions.

Third, many developing-country capital markets are utterly inefficient. Weak corporate governance, depressed domestic demand, and high political risk create barriers to foreign private investment on a major scale. There is a silver lining, though. In advance of COP21, 187 countries—representing 97 percent of global greenhouse gas emissions—handed in so-called “intended nationally determined contributions.” They describe the post-2020 climate actions that countries intend to undertake under the new climate accord. According to the International Energy Agency, executing them would require that the global energy sector invest $13.5 trillion in energy efficiency and low-carbon technologies from 2015 to 2030, or 40 percent of total energy sector investment. Today, it’s often the multilateral banks that finance clean energy or other infrastructure in emerging and frontier markets. The Asian Development Bank, for example, invested $75 million in Bangladesh’s Bibiyana II power plant, which aims to help reduce shortfalls in the country’s power supply, while also cutting greenhouse gas emissions. As countries look for new ways of financing the execution of their climate pledges, tiered capital structures can enlarge the capital pool, where bilateral and multilateral donors take the greatest risk, and impact investors take some risk in exchange for high impact. Breathing new life into public-private partnership strategies, together they can be catalytic in bringing much-needed classical private equity, as well as infrastructure investors and their expertise, to the table.

Fourth, the power of digital is the talk of town. Scared of newcomers, banks are rethinking their business models and investing in FinTech—technology used in financial institutions’ back, middle, and front office functions to dramatically improve their business models and value creation processes. Democratizing access to capital via crowdfunding is similarly unleashing disruptive creativity. Take firms such as CodersTrust, a Danish startup integrating FinTech, EdTech, and WorkTech to help young people in the developing world upgrade their IT skills via student loans, education, mentoring, and freelance jobs. This enables students to participate in the fast-growing online IT labor market and helps fill the growing online programming gap—all while creating $2-an-hour programming jobs in countries such as Bangladesh, where 40 percent of the population does not even make $2 a day. By funding digital businesses that build financial inclusion and affordable service provision, impact investors can get a foot into the financial services door. By helping build such “digital supply chains,” they can enable men and women in emerging markets to achieve a step change in their income or purchasing power.

The Zuckerberg pledge to give back by using tools of modern finance other than grants and growing excitement around the possibilities created by digital currencies will no doubt lead to another peak in impact investing enthusiasm in 2016. Let us make sure that we investors also focus on some of the heavy-duty work of improving the social and environmental performance of firms in emerging markets—where millions of people work very hard for a living—and contribute to making the energy transition a success.

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