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Why Impact? Four Reasons.

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A question impact investors often face is "Why Impact?" or, in another phrasing, "Won't the money find its way to the opportunities anyway?" Committed believers in capitalism tend to be committed to the notion that capital will, like water, always find its level -- risk will be priced by market participants, and the system should otherwise be left to its own devices. What, then, is the point of adding the complication of impact measurement? Should capitalists who don't care about non-financial outcomes pay attention to the development of the impact space anyway? Various market participants have come up with different responses to this, and they tend to have a few things in common. A key point is that impact investments facilitate good ESG practices . Here's a list: What You Look For Is What You See. Looking at the world with an impact lens will push investors to seek out certain types of opportunities more than others. This might narrow the inves...
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Market-rate impact investing in context

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In April 2019, The Global Impact Investing Network (GIIN) published a set of principles to help determine what counts as impact investing. These complemented its existing framework , below: Intentionality – the investor must intend to have a positive impact Positive return expectations – impairment of capital or philanthropic grants are excluded Range of return expectations and asset classes – return expectations can vary from below market (“impact-first” or “concessionary”) to market rate (generally associated with “impact-at-scale”) Impact measurement – commitment to measure and report the social and environmental performance and progress of underlying investments, ensuring transparency and accountability while informing the practice of impact investing and building the field. U.S. state pension plans, among other large institutional investors, generally have a fiduciary duty to seek market-rate returns for their plan participants. Hence, they are often precluded from inve...
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The Rise of Impact-at-Scale

The term "impact investing" in its current connotation, was coined during a Rockefeller Foundation conference in 2007. A year earlier, the United Nations launched its Principles of Responsible Investing (PRI), with 100 signatories . Yet it took another decade for the "impact-at-scale" business to launch properly. This space is characterized by the following: Associated with an established investment firm Fund size of around $1billion Commitment to deliver market rates of return Commitment to estimate impact rigorously at the time of underwriting Commitment to audit impact results In 2016, Bain Capital launched Bain Capital Double Impact (BCDI), which closed at $390m, and TPG launched its first Rise Fund, which raised $2bn. Each started investing in 2017. KKR closed its first Global Impact Fund at $1bn in August 2019 , and as of January 2020 had made five investments. Partners Group is underway with fundraising against a $750m target, and Apollo in August ...
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