The Evolving Impact Investing Landscape

In the not-too-distant past, what we now know as impact investing was pretty much confined to de-selecting “bad” publicly traded securities from portfolios and investing in securities that were selected because of factors deemed to be positive – board diversity, nascent social impact industries, and so on. Private impact investments were generally funded by individual philanthropists or like-minded groups of angel investors.

Fast forward.

The impact investing space today is hopping, which is tremendously exciting. Because participants are framing their approach to the space based on their worldview and their individual industry and sector backgrounds there is an opportunity lay a little groundwork and be sure all participants share some ways to translate the world we all care so much about to one another. There is an economic benefit to this as well; speaking roughly the same language makes it a lot easier to craft a term sheet.

As a point of reference for readers newer to this space, the Forum for Sustainable and Responsible Investment (USSIF) documents $8.72 trillion of professionally managed assets currently being invested in accordance with sort of environmental, social, and/or governance element, a 33% increase since 2014.

The 2017 report by the Global Impact Investing Network (GIIN) references thirty-five (35) impact measurement toolkits. That is, 35 different ways to measure impact investing success. Just on that list. A new platform is now available that tracks more than 4,000 social impact metrics. Safe to say there is no universal yardstick. And while there is a handful of leading ESG rating agencies, there is also a continuing stream of new entrants and smaller firms and other approaches. Point being? This is not a cohesive, aligned, homogenous space; it’s an exciting, evolving one. Suggestions for adds to the Landscape are welcome.

 

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