Impact investing is a form of investment that has risen to prominence in recent years. Compared to other forms of socially responsible investment, the most prominent feature of impact investing is a focus on measuring the social and environmental return that it generates. In response, much effort has been undertaken to develop effective measurement systems, but significant confusion remains around the notions of ‘non-financial return’ and ‘impact’, and their assessment in practice. Thus this paper draws on a range of relevant literature as well as the authors’ previous practical experience to provide a preliminary overview of underlying concepts. Further it begins to cast a critical eye on the roles and responsibilities within measurement, making more explicit the subjective interpretation of social and environmental return (SER) by investors, and the clash of suppositions taken from other older measurement traditions.
There is an emerging zeitgeist in the investment community: society’s goal should be to create an environmentally sustainable economy that is healthy and dignified for all people. This view represents a fundamental shift in the definition of “investment.” At its heart is a dawning awareness—grounded in evidence — of both the cost of not considering environmental sustainability and social impact, and the benefit of doing so. Since capital is arguably the fuel of the economy, those who identify with this zeitgeist believe investors have a fundamental role to play in bringing the more perfect economy into being.
The literature on social impact is diverse and much of it is focused on a specific topic such as impact investment, collective impact and impact evaluation. Despite the eclecticism, they share a common quest to understand what has worked, what are critical factors and barriers to achieving impact, and whether an intervention is replicable and scalable. Achieving positive sustainable impact is the raison d'être and the bottom line of our work. But too often we get fixated with operational demands, focusing on the urgent rather than the important. There is no magic bullet to achieve impact. It is a continuous process reflecting, doing, and learning.