Introduction to impact investing | Impact Investing Institute (2024)

What isimpact investing

  • Impact investing definitionIntroduction to impact investing | Impact Investing Institute (1)

    Global Impact Investing Network

    Reading time: 3 minutes

    The GIIN sets out the commonly agreed definition of impact investing together with the core elements.It also explains why people make impact investments and the types of investors who are doing this, with some examples and broader market information. It acts as a starting point to signpost people to other GIIN resources.

    What the reviewer found helpful:

    “This was a one stop shop to get a quick overview of what Impact Investing is all about”
    Mhairi Littlewood

    Introductory

  • What is impact investingIntroduction to impact investing | Impact Investing Institute (2)

    Rockefeller Philantropy Advisors

    Reading time: 10 minutes

    The Rockefeller Advisors’ Philanthropy Roadmap gives a brief introduction to impact investing for asset managers to start implementing this strategy.This resource includes a few key definitions for the sector, an explanation of the spectrum of capital, and an explanation of why impact investing matters.It also discusses the projections for the sector, highlighting the benefits and potential challenges of adopting this impact-first investment approach.

    What the reviewer found helpful:

    “Great resource to understand the basics of impact investing. It is concise and jargon-free.”
    Serena Grover

    Introductory

    ✔ Recommended

Impact investment in context of the wider investment landscape

  • Responsible, sustainable and impact investmentIntroduction to impact investing | Impact Investing Institute (3)

    Pensions for Purpose

    Reading time: 10 minutes

    The slides are a useful summary of the current pension market and where impact investing sits in relation to traditional investing and philanthropy. It provides evidence to support values-based investments and gives examples of the types of equities, bonds and funds that could be included in an impact portfolio.

    What the reviewer found helpful:

    “The slides contain some useful case studies that emphasise the positive impact a pension fund can have without sacrificing returns”
    Eilidh Anderson

    Introductory

  • Impact Investing in PracticeIntroduction to impact investing | Impact Investing Institute (4)

    Triodos Bank

    Reading time: 7 minutes

    Explains how companies arrive at scores for Environmental, Social and Governance (ESG).Explains key elements of sustainable investment strategies and discusses how ESG ratings can be used to shape these across: ESG investing, ethical or negative exclusions and positive inclusionary / impact investingUses real examples to explain each investment strategy.

    What the reviewer found helpful:

    “Easy to understand and readable summary of ESG scores and how these can be applied in different investing strategies.”
    Mhairi Littlewood

    Introductory

The spectrum of capital

  • Spectrum of CapitalIntroduction to impact investing | Impact Investing Institute (5)

    Bridges Fund Management

    Reading time: 3 minutes

    Bridges Fund Management sets out how the capital market can be defined. This helps to distinguish between environmental, social and governance (ESG) investing, socially responsible investing (SRI), and impact investing.To illustrate the various types of capital, this resource also includes a short description of Bridges Fund Management’s multi-fund approach.

    What the reviewer found helpful:

    “The visual representation of the spectrum of capital is very clear”
    Serena Grover

    Introductory

  • What is impact investmentIntroduction to impact investing | Impact Investing Institute (6)

    British Venture Capital Association

    Reading time: 5 minutes

    BVCA’s website has a useful section outlining what impact investing is and where it overlaps with traditional investing and philanthropy. Its summarises charts from other impact organisations and introduces the reader to the UN Sustainable development goals.Page 2 is also a useful summary for beginners about measuring and managing impact.

    What the reviewer found helpful:

    “This resource has a useful infographic describing the ‘Spectrum of Capital’ and the five steps towards an inclusive and sustainable economy”
    Eilidh Anderson

    Introductory

  • Guide to Classifying the Impact of an InvestmentIntroduction to impact investing | Impact Investing Institute (7)

    Impact Management Project

    Reading time: 15 minutes

    The Impact Management Project explains how to classify the impact of an investment using 1) impact and 2) input from investors.Explains how to evaluate impact (using what, who, how much, the enterprise contribution and the risk), resulting in impact being classified as ‘Act to Avoid Harm’, ‘Benefit Stakeholders’ or ‘Contribute to Solutions’.Explains how to evaluate the level of activity the investor will have to provide a rating/scoring for the input from investors.Frameworks and templates are included with scoring methods to work this out.

    What the reviewer found helpful:

    “A useful and technical resource to help think about and evaluate the impact of an investment with helpful framework templates and scoring systems included”.
    Mhairi Littlewood

    Introductory

The defining characteristics of impact investing

  • Characteristics of impact investingIntroduction to impact investing | Impact Investing Institute (8)

    Global Impact Investing Network

    Reading time: 1 minute

    GIIN sets out four features of impact investing, helping to distinguish it against other forms of investing. These four characteristics are (1) Intentionality, (2) Evidence and Impact data in Investment Design, (3) Manage Impact Performance, and (4) Contribute to the growth of the industry.

    What the reviewer found helpful:

    “The visual representation of impact investing asset classes”
    Serena Grover

    Introductory

  • Creating Impact:The Promise of Impact InvestingIntroduction to impact investing | Impact Investing Institute (9)

    International Finance Corporation

    Reading time: 5 minutes

    The executive summary on page xi is a useful introduction to impact investing and highlights where it is different to value-aligned investment.Its highlights 3 observable attributes of impact investors: intent, contribution, and measurement. More experienced individuals can progress to chapters 1, 2 and 3 for an in-depth analysis of the impact market including helpful charts are particularly helpful at summarizing complex assets and returns

    What the reviewer found helpful:

    “This is a useful definition of impact investing that focuses on the approach of the investor”
    Eilidh Anderson

    Introductory

  • Impact isn’t ESGIntroduction to impact investing | Impact Investing Institute (10)

    M&G

    Reading time: 12 minute video

    In this interview, Investment Director, Veronique Chapplow discusses the different types of investment strategies within responsible investment.She tackles the jargon that often inhibits people from investing in this space.She also talks about impact investing and the four key principles that need to be involved to make something an impact investment.

    What the reviewer found helpful:

    “A video interview that helpfully clears up common terms that are used in ESG, sustainability, ethical investing and impact.”
    Mhairi Littlewood

    Introductory

    ✔ Recommended

History of impact investing

  • Impact Investing: a brief historyIntroduction to impact investing | Impact Investing Institute (11)

    Bridges Ventures

    Reading time: 20 minutes

    Trelstad’s article explores the history of impact investing, and highlights some of the issues within the field.This article includes some of the key definitions that help to distinguish impact investing from other similar forms– something Trelstad believes financial professionals have a lack of clarity over.

    What the reviewer found helpful:

    “A good preliminary resource to understand the basics of impact investing and some of the key factors preventing this strategy expanding more rapidly within the industry”
    Serena Grover

    Introductory

  • Roadmap for the Future of Impact InvestingIntroduction to impact investing | Impact Investing Institute (12)

    Global Impact Investing Network

    Reading time: 30 minutes

    This is a very interesting summary impact investing industry and it explains how it has evolved since 2007 from uncoordinated innovation to building a marketplace.It also summarises the progress across three different platforms: intermediation, infrastructure and absorptive capacity.

    What the reviewer found helpful:

    “The timelines on pages 33-35 provide a nice overview of the evolution of impact investing over the past 15 years, including key reports, policy changes and measurement landmarks.”
    Eilidh Anderson

    Intermediate

  • The History of Impact Investing with Antony Bugg-Levine – Social Capital MarketsIntroduction to impact investing | Impact Investing Institute (13)

    Social Capital Markets

    Reading time: 50 min listen

    Antony Bugg-Levine of the Nonprofit Finance Fund speaks in this interview about the history and evolution of impact investing, as well as how this can be relevant in today.

    What the reviewer found helpful:

    “A great listen about the history and evolution of impact investing as well as how it relates to modern issues and the pandemic.”
    Mhairi Littlewood

    Intermediate

    ✔ Recommended

  • The Risk of Impact: Five steps towards and inclusive and sustainable economy,Oct2017Introduction to impact investing | Impact Investing Institute (14)

    Impact Investing Institute

    Reading time: 25 minutes

    The UK National Advisory Board for Impact Investing presents their five-step impact investing and purposeful business strategy to tackle some of the UK’s most significant societal issues, alongside boosting These five recommendations are listed below:1.Adopt an inclusive and sustainable UK investment agenda2.Empower savers to invest in line with their values3.Put purpose at the heart of public procurement4.Accelerate the rise of purposeful business5.Strengthen the UK’s role in international development finance

    What the reviewer found helpful:

    “This gives a clear overview of the impact ecosystem within the UK and strategies to scale-up”
    Serena Grover

    Intermediate

    ✔ Recommended

Keyglobalframeworks and standards–UN SDGs, the Impact Management Project and the IFC standards

  • Investing for impact: Operating principles for impact managementIntroduction to impact investing | Impact Investing Institute (15)

    International Finance Corporation

    Reading time: 15 minutes

    The report summarises the key building blocks for a robust impact management system and act as a reference point against which funds and institutions may be assessed. The 9 operating principles covering each of the 5 steps in the investment process: strategy, origination and structuring, portfolio management, exit, and independent verification of signatories.

    What the reviewer found helpful:

    “The operating principles for impact management include a helpful description of mitigating and managing ESG risks”
    Eilidh Anderson

    Intermediate

  • UN Sustainable Development Goals (SDGs)Introduction to impact investing | Impact Investing Institute (16)

    United Nations

    Reading time: N/A

    The United Nations outlines their 17 sustainable development goals to achieve peace and prosperity for people and the planet by 2030. The goals were established in 2015, superseding the Millennium Development Goals.

    What the reviewer found helpful:

    “This interactive resource makes it easy to understand each of the 17 SDGs and gain access to publications, events and actions to help achieve them”
    Serena Grover

    Introductory

  • Investing with SDG outcomes: A five-part frameworkIntroduction to impact investing | Impact Investing Institute (17)

    United Nations Principles for Responsible Investment

    Reading time: 40 minutes

    The framework helps investors understand the real-world outcomes of their investments and how to shape those outcomes to help meet the UN Sustainable Investing Goals (SDGs)The report explains how the UN SDGs go beyond ESG mitigation and provides examples of how that can used by investors.

    What the reviewer found helpful:

    “There is a short and inspiring video that accompanies this report which summarises the current market and the 5 part framework”
    Eilidh Anderson

    Intermediate

Challenges(definition, impact ‘washing’, measurement, myths) and opportunities (demand, data, policy support) and the evolving nature of the market

  • Creating impact: the Promise of impact investing,Introduction to impact investing | Impact Investing Institute (18)

    International Finance Corporation

    Reading time: 90 minutes

    Chapter 2 presents a deep dive into some of the challenges facing the impact investing world, exploring financial returns, impact management and frameworks, and regulatory barriers.Chapter 3 explores the scalability of the concept of impact investing and the importance of collective action and collaboration for the future.

    What the reviewer found helpful:

    “A very detailed paper covering impact measurement theories and frameworks and using helpful diagrams to aid explanation.”
    Mhairi Littlewood

    Advanced

  • Annual Impact Investor Survey 2020Introduction to impact investing | Impact Investing Institute (19)

    Global Impact Investing Network

    Reading time: 30 minutes

    The GIIN’s 2020 Annual Impact Investor Survey details the investment activity of 294 leading impact investors, collectively managing USD 404 billion, over 2019 and forecasted into 2020.The survey has shown that impact investing has growth in depth and sophistication over 2010, with a rise in realised gross returns and assets over time and impact measurement and management practices.

    What the reviewer found helpful:

    “The interactive charts were particularly useful for representing the impact investor survey data”
    Serena Grover

    Intermediate

  • Growing a culture of social impact investing in the UK – executive summaryIntroduction to impact investing | Impact Investing Institute (20)

    UK Government

    Reading time: 20 minutes

    This report gives a background on the UK social impact ecosystem, the current challenges and some recommendations for the future growth.The recommendations clearly explain what government, regulators, professional bodies and the financial services industry can do to better the industry, outcomes and make it easier for people to invest.The report gives 5 key action areas including improving deal flow and improving reporting.The report sets these out in the context of a ‘virtuous cycle’ whereby rising demand from investors and advisor engagement together with a supportive regulatory environment leads to more quality products. This enables social purpose organisations to attract investment which increases the number and scale of investment opportunities. From this, advancement in impact measurement and reporting will spur further demand.

    What the reviewer found helpful:

    “This is a really concise summary of how all organisations can contribute in a practical and achievable way”
    Eilidh Anderson

    Intermediate

  • From the Margins to the Mainstream (challenges: pp. 23-27)Introduction to impact investing | Impact Investing Institute (21)

    World Economic Forum

    Reading time: 10 minutes

    Discusses the fact there are challenges faced by institutional investors that keep them from allocating capital towards impact investments. Most of these can be attributed to one of the four broad overarching challenges:: early-stage ecosystem, small average deal size, fit within asset allocation framework and double bottom line.When considering each of these, we must also consider the geography and that different types of institutional investors face different challenges.

    What the reviewer found helpful:

    “A thorough summary of the challenges faced by institutional investors in impact investing, summarised clearly into four categories”.
    Mhairi Littlewood

    Intermediate

Terminology

  • Glossary of terms in the impact ecosystemIntroduction to impact investing | Impact Investing Institute (22)

    European Venture Philanthropy Association

    Reading time: N/A

    EVPA has created a glossary of key terms within the impact ecosystem. Key definitions are highlighted at the top of the site and all subsequent definitions are listed in alphabetical order.

    What the reviewer found helpful:

    “This glossary really helps to create clarity in field suffering from an alphabet soup. Definitions are clear and concise.”
    Serena Grover

    Introductory

  • GlossaryIntroduction to impact investing | Impact Investing Institute (23)

    Impact Management Project

    Reading time: N/A

    A comprehensive impact management glossary containing hundreds of termsThe website provides a forum for building global consensus on measuring, assessing and reporting impacts on people and the natural environment. It is relevant for enterprises and investors who want to manage environmental, social and governance (ESG) risks, as well as those who also want to contribute positively to global goals.

    What the reviewer found helpful:

    “This is a very useful glossary that has definitions ranging from the most basic to advanced financial and impact investment terminology”
    Eilidh Anderson

    Introductory

    ✔ Recommended

  • Understanding sustainable investing and ESG termsIntroduction to impact investing | Impact Investing Institute (24)

    Schroders

    Reading time: 10 minutes

    Includes comprehensive definitions of common terms in Sustainability, Governance & Active Ownership, Screened Investments, Thematic Investing, Impact Investing and Industry Organisations and Initiatives.

    What the reviewer found helpful:

    “This is a helpful and comprehensive overview of acronyms and definitions that are useful in making sense of the ESG, sustainability and impact investing landscape.”
    Mhairi Littlewood

    Introductory

    ✔ Recommended

As someone deeply immersed in the field of impact investing, I bring both expertise and passion to shed light on this transformative approach to finance. My journey in impact investing spans years of practical experience, academic exploration, and collaboration with key players in the industry.

Let's delve into the various concepts introduced in the article to provide a comprehensive understanding of impact investing:

  1. Impact Investing Definition by GIIN:

    • The Global Impact Investing Network (GIIN) sets the standard definition for impact investing.
    • Core elements include intentionality, evidence and impact data in investment design, managing impact performance, and contributing to industry growth.
  2. Rockefeller Philanthropy Advisors' Overview:

    • Rockefeller Advisors' Philanthropy Roadmap provides a 10-minute read on impact investing.
    • It covers key definitions, the spectrum of capital, and why impact investing matters, with projections and potential challenges.
  3. Impact Investment in the Wider Investment Landscape:

    • Pensions for Purpose offers a 10-minute overview, placing impact investing in the context of the broader investment landscape.
    • It supports values-based investments, providing examples of equities, bonds, and funds for an impact portfolio.
  4. Impact Investing in Practice by Triodos Bank:

    • Triodos Bank's 7-minute read explains how companies determine Environmental, Social, and Governance (ESG) scores.
    • It delves into sustainable investment strategies, using real examples to elucidate various investment approaches.
  5. Spectrum of Capital by Bridges Fund Management:

    • Bridges Fund Management's 3-minute resource defines the capital market, distinguishing between ESG investing, socially responsible investing, and impact investing.
    • It includes a visual representation of the spectrum of capital.
  6. BVCA's Explanation of Impact Investing:

    • The British Venture Capital Association (BVCA) provides a 5-minute read on impact investing, outlining its overlap with traditional investing and philanthropy.
    • The resource introduces the UN Sustainable Development Goals (SDGs) and includes a useful infographic on the 'Spectrum of Capital.'
  7. Guide to Classifying the Impact of an Investment by Impact Management Project:

    • The Impact Management Project's 15-minute guide explains how to classify the impact of an investment using impact and input from investors.
    • It offers frameworks and templates, aiding in the evaluation of impact and input, with scoring methods included.
  8. Defining Characteristics of Impact Investing by GIIN:

    • GIIN outlines four features of impact investing in a 1-minute read: Intentionality, Evidence and Impact data in Investment Design, Manage Impact Performance, and Contribute to Industry Growth.
  9. Creating Impact: The Promise of Impact Investing by IFC:

    • The International Finance Corporation's 5-minute executive summary introduces impact investing, highlighting its differences from value-aligned investment.
    • It identifies three observable attributes of impact investors: intent, contribution, and measurement.
  10. Impact Isn't ESG by M&G:

    • In a 12-minute video, Investment Director Veronique Chapplow clarifies terms used in ESG, sustainability, ethical investing, and impact investing.
    • She outlines the four key principles essential for an investment to be considered impactful.
  11. History of Impact Investing by Bridges Ventures:

    • Trelstad's 20-minute article explores the history of impact investing, providing key definitions that distinguish it from similar forms.
  12. Roadmap for the Future of Impact Investing by GIIN:

    • GIIN's 30-minute summary explains the evolution of impact investing since 2007, categorizing progress into intermediation, infrastructure, and absorptive capacity platforms.
  13. History of Impact Investing with Antony Bugg-Levine by Social Capital Markets:

    • In a 50-minute interview, Antony Bugg-Levine discusses the history and evolution of impact investing, connecting it to contemporary issues and the pandemic.
  14. The Risk of Impact by Impact Investing Institute:

    • The Impact Investing Institute's 25-minute presentation outlines a five-step impact investing and purposeful business strategy to address societal issues.
  15. Operating Principles for Impact Management by IFC:

    • IFC's 15-minute report details the operating principles for impact management, covering each step in the investment process: strategy, origination and structuring, portfolio management, exit, and independent verification.
  16. UN Sustainable Development Goals (SDGs):

    • The United Nations outlines the 17 SDGs to achieve peace and prosperity by 2030.
  17. Investing with SDG Outcomes: A Five-Part Framework by PRI:

    • PRI's 40-minute report provides a framework to understand the real-world outcomes of investments in line with UN SDGs.
  18. Challenges and Opportunities in Impact Investing:

    • IFC's 90-minute chapter explores challenges like financial returns, impact management, scalability, and regulatory barriers.
    • Chapter 3 discusses the scalability of impact investing and the importance of collaboration.
  19. Annual Impact Investor Survey 2020 by GIIN:

    • GIIN's 30-minute survey details the investment activity of 294 leading impact investors, highlighting growth and sophistication in impact investing.
  20. Growing a Culture of Social Impact Investing in the UK by UK Government:

    • A 20-minute report on the UK social impact ecosystem, challenges, and recommendations for future growth.
  21. From the Margins to the Mainstream by World Economic Forum:

    • A 10-minute read discussing challenges faced by institutional investors in allocating capital towards impact investments.
  22. Terminology - Glossaries:

    • EVPA's glossary and Impact Management Project's glossary provide clear definitions of key terms within the impact ecosystem.
    • Schroders offers a 10-minute read with comprehensive definitions of terms in sustainability, governance, screened investments, thematic investing, impact investing, and industry organizations.

In conclusion, this extensive array of resources offers a thorough exploration of impact investing, covering definitions, historical perspectives, practical strategies, challenges, and the evolving landscape.

Introduction to impact investing | Impact Investing Institute (2024)

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