Adam Wylychenko in Business Consulting, Entrepreneurs, Business Banking Vice President • CBRE Caledon Capital Jun 11, 2019 · 1 min read · +100

Characteristics of Impact Investing

Characteristics of Impact Investing

Impact investing is defined by a set of core characteristics that delineate it from traditional investment strategies. These characteristics help investors judge whether or not transactions qualify as true impact investments and can allow investors to evaluate them amongst alternatives

There are four practices that define impact investing, which aim to provide clear and concise reference points and actions to develop a baseline of expectations for specific impact investments.


Intentionality

This is considered an intentional desire to be able to contribute to the measurable environmental and social benefit. Investors aim to address opportunities and solve problems. Intentionality is the core of what differentiates impact investing from other investments.


Use of Evidence and Impact Data in Investment Design

In developing a “Theory of change” for an impact investment strategy, opportunities cannot be based on a hunch or an idea alone, there should be evidence and data in order to make intelligent and beneficial decisions. Once evidence and data have been found, it is easier to develop an investment case.


Manage Impact Performance

Most impact investments come with very specific intentions which necessitates that they must be managed towards those intentions. Some intentions include having feedback loops put in place for monitoring and evaluation purposes, in order to communicate specific information to support other stakeholders that are a part of an investment chain to manage the impact.


Contribute to the Growth of the Industry

Those with credible impact investing practices and techniques use shared terms, participate in conventions and certain criteria for describing their goals, strategies and performances to other investors. Investors also contribute to the growth of the industry by sharing learnings where possible to help those with less experience understand what contributes to an environmental and social benefit.


The core characteristics of impact investment complement the existing definition that was written by GIIN (Global Impact Investing Network), which are investments that have been established with the overall intention to generate positive, measurable social and environmental impact, along with a financial return.