Impact Investing Demystified: A Dual Mandate for Financial and Social Returns
Impact Investing (II) has emerged as a critical strategy for high-net-worth individuals and institutional investors seeking to align financial returns with measurable social and environmental outcomes. The market's rapid expansion has brought both opportunities and challenges, including definitional complexity and the risk of greenwashing.
The Dual Mandate defines II: intentional generation of financial returns alongside verifiable positive impact. This differs fundamentally from ESG's risk-mitigation approach and SRI's exclusionary screening. Additionality—the direct LINK between capital deployment and specific outcomes—sets II apart.
Contrary to popular belief, impact funds frequently achieve market-rate returns. Top-quartile performers demonstrate competitive returns compared to conventional portfolios, dispelling the myth of necessary financial sacrifice.
