When Can Impact Investing Create Real Impact?

This article addresses how impact investors can ensure their investments genuinely contribute to social or environmental objectives. It introduces three parameters of impact: enterprise impact, investment impact, and nonmonetary impact, defining impact as an increase in the quantity or quality of social outcomes beyond what would have otherwise occurred. The authors caution against unrealistic expectations of simultaneously achieving market-rate returns and significant social impact, emphasizing that concessionary investments are often necessary for real impact.