The notion that the success of an investment should
be measured by financial return alone has always been
contested and has been more hotly disputed in the
wake of the financial crisis. Specifically, there is a
growing belief in certain financial and political circles
that investments should be judged by their ability to
generate both a profit and a positive social impact.
Clean technologies, such as solar electricity, are often
held up as an example of how this new approach to
investing – known as ‘impact investing’ – can work.
This paper summarizes the main findings from new
research on impact investing supported by IESE Business
School and the Family Office Circle Foundation, based
on interviews with more than 60 dedicated impact
investors. In it, we define impact investing, identify
the diverse investors and how they have succeeded or
failed and explain why the popular assumption that
impact investing involves a trade-off between financial
gain and social impact is wrong.
In fact, one of the most striking findings from our
research is that impact investing can only be called
impact investing if there is a positive correlation
between the financial return and the social impact.