Impact investing - what is it?

March 11, 2021

Impact investments are investments with an aim of generating positive, measurable social and environmental impact togetheer with financial return. These can

take place in emerging and developed markets
target a range of returns
provide capital to the most pressing challenges

These challenges can be found across sectors such agriculture, energy, conservation, microfinance, and affordable and housing, healthcare, and education.

Four tenets of impact investment by GIIN

The Global Impact Investing Network has defined four characteristics and basic expectations of impact investing:

Intentionality (positive social and environmental impact)
Investment with return expectations (expected to generate financial return)
Range of return expectations and asset classes
Impact measurement (commitment to measure and report)

What and how to measure impact investments

This depends on the investors and their intentions, goals and objectives of the investments. Generally these include

Establishing and stating social and environmental objectives to relevant stakeholders
Setting performance metrics/targets related to these objectives using standardized metrics wherever possible
Monitoring and managing the performance of investees against these targets
Reporting on social and environmental performance to relevant stakeholders