Impact investing intends to marry measurable positive social and/or environmental impact, together with, financial returns. Impact investing can, therefore, be a highly effective tool in addressing social and/or environmental challenges, while generating financial returns at the same time.
Impact investing can provide a win-win proposition to both investor and society. The investor can be a private individual, an institution, government, charity or any other body looking to leverage the benefits offered by the impact investing concept. The Global Impact Investing Network (GIIN) have defined impact investing as follows:
”Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.”.
Impact investing can be seen as a form of socially responsible investing and as a guide for various investment strategies. Impact investments are made into companies (for or non-profit), organisations and funds, with the intention to generate measurable social and/or environmental impact together with a financial return.
Impact investors can target both emerging and developed markets, and chase a range of returns, from below market to above market rates, depending upon a variety of circumstances. Impact Investing tends to have roots in either social issues and/or environmental issues, yet, the spectrum can be broad. Impact investors actively seek to place capital in businesses, nonprofits and funds that can harness the positive power of enterprise. Investment can occur across various asset classes, including private equity/venture capital, debt, and fixed income.
Watch the quick and catchy video below followed by a boarder explanation from Anthony Bugg-Levine and Ted Emerson into impact investing.