What Good Is Impact Investing?

Impact investing is on the rise. Yay! But, um, what is it? Last year, Michael Drexler and Abigail Noble of the World Economic Forum took a stab at defining it as “an investment approach intentionally seeking to create both financial return and positive social impact that is actively measured.” That is, you have to intend to do good, and you have to measure whether you’re succeeding. This was in a report called From the Margins to the Mainstream that did a lot to introduce impact investing to the wider investing world. Now Drexler and Noble are out with a new report, Charting the Course, that gets more into the nitty gritty of how one might go about investing with impact. (In something of a sign of the times, it’s not the only big impact-investing report out this week; the G8 Social Impact Investment Task Force has weighed in too.)

You could, Drexler and Noble write, take advantage of government subsidies to invest in affordable housing or renewable energy (something that, as they note, people have been doing for decades). Or you could participate in projects financed in part by conventional investors and in part by non-profits. Or you could try to take advantage of limitations in conventional financial metrics to get higher long-run returns by focusing on sustainability and social good. Or you could accept lower returns in exchange for accomplishing social goals. Click here http://blogs.hbr.org/2014/09/what-good-is-impact-investing/ to read more