Why impact investing matters
It adds impact objectives, measurement, and accountability to investment analysis, creating potential alignment but also attribution and greenwashing risk.
How it is applied
Investors define objective, target population, theory of change, additionality, metrics, baseline, financial target, safeguards, and reporting.
Portfolio example
A fund finances affordable housing and tracks units delivered, affordability, resident outcomes, and financial performance.
How to interpret it
Outputs are not the same as outcomes, and outcomes are not necessarily caused by the investment.
Limitations and common misconceptions
Metrics can be selective, impacts can be negative elsewhere, and additionality is difficult to prove.
Sources and further reading
- What is Responsible Investment?Principles for Responsible Investment