Almost Everything You Know About Impact Investing Is Wrong

First, impact investors need to anchor themselves to market returns and the values of conventional investing. Second, outlooks on impact measurement need to be revamped. There is a general expectation that observed change is an indicator that can be reliably attributed to a particular investment or company. However, if an investment increases the wealth of stakeholders as well as mitigates the negative effects of environmental degredation or another social cause it will provide investors with more traction than attempting to prove the additionality of an investment.

 

Lastly, leveraging the power of big companies can assist with the complexities in the sectors most critical to the poor, namely infrastructure, health, agriculture, and logistics. Large global companies have the capacity to acquire and scale new technologies as well as implement the innovative business models essential for success in low-income countries (LICs) and low- and middle-income countries (LIMCs). To avoid cynicsm and demonstrate effectiveness, investors need to ensure that impact investing is clear in purpose, grounded in the facts, and pursued with the highest possible efficiency.