Bravo, Paula and Lauren, for helping clarify some basic concepts in this emerging field. I would just add that, wherever impact investments fall on the spectrum of expected returns, and whatever the asset class, the fundamental requirement is “additionality”—that the investments are likely to increase their investees’ socially valuable outputs to an extent than ordinary commercial investments do not.
Paula and Lauren have written a commendable piece, which was passed to me by a senior professional at a leading financial institution, proving it already has had impact.
I particularly like the point about “clustering” around three variables, “risk, return and…...intended type of impact” rather than two (risk and return). We at ClearlySo have been arguing the case for “3D Investing” since 2008. Earlier characterisations of impact investing as a new asset class, might have served tactical ends, but it lost this key point—ALL investments should be looked at three dimensionally.
The authors rightly point out that the finance-first/impact-first taxonomy as having outlived its usefulness. There may not be a trade-off. In fact, there is strong evidence that there is no “impact investment see-saw”, where more risk-adjusted financial return must mean less social impact, and vice versa. The two are probably positively correlated.
The authors did skirt past the problems that coining “impact investment” caused in the first instance. It was coined in 2007 by US-based investors and practitioners as an attempt to simplify and unify language, but in fact, the term social investment preceded it by 1-2 decades! So we have spent years in this trans-oceanic debate; most evidnet in the recent G8 Task Force. I think the Americans have won this battle, although the term “social entrepreneur” has persisted. So let’s call it a draw!
And also let’s spend our time focusing on generating impact as opposed to debating language. I have never been convinced that the diversity of words used was much of a problem anyway—the growth in this area attests to this!
Do you mind if I quote a couple of your posts
as long as I provide credit and sources back too your website?
My blog is in the very same area of interest as yours
and my users would certainly benefit from some of the information you provide here.
Please let me know if this ok with you. Thank you!
COMMENTS
BY Paul Brest
ON June 10, 2015 09:01 PM
Bravo, Paula and Lauren, for helping clarify some basic concepts in this emerging field. I would just add that, wherever impact investments fall on the spectrum of expected returns, and whatever the asset class, the fundamental requirement is “additionality”—that the investments are likely to increase their investees’ socially valuable outputs to an extent than ordinary commercial investments do not.
BY Rodney Schwartz
ON June 22, 2015 03:25 AM
Paula and Lauren have written a commendable piece, which was passed to me by a senior professional at a leading financial institution, proving it already has had impact.
I particularly like the point about “clustering” around three variables, “risk, return and…...intended type of impact” rather than two (risk and return). We at ClearlySo have been arguing the case for “3D Investing” since 2008. Earlier characterisations of impact investing as a new asset class, might have served tactical ends, but it lost this key point—ALL investments should be looked at three dimensionally.
The authors rightly point out that the finance-first/impact-first taxonomy as having outlived its usefulness. There may not be a trade-off. In fact, there is strong evidence that there is no “impact investment see-saw”, where more risk-adjusted financial return must mean less social impact, and vice versa. The two are probably positively correlated.
The authors did skirt past the problems that coining “impact investment” caused in the first instance. It was coined in 2007 by US-based investors and practitioners as an attempt to simplify and unify language, but in fact, the term social investment preceded it by 1-2 decades! So we have spent years in this trans-oceanic debate; most evidnet in the recent G8 Task Force. I think the Americans have won this battle, although the term “social entrepreneur” has persisted. So let’s call it a draw!
And also let’s spend our time focusing on generating impact as opposed to debating language. I have never been convinced that the diversity of words used was much of a problem anyway—the growth in this area attests to this!
BY Kaylee
ON October 6, 2015 06:45 PM
Do you mind if I quote a couple of your posts
as long as I provide credit and sources back too your website?
My blog is in the very same area of interest as yours
and my users would certainly benefit from some of the information you provide here.
Please let me know if this ok with you. Thank you!