The myth of a trade-off between impact and returns
“Impact Investing. Happy Returns” – this was the headline in the Economist way back in 2011, when few people were familiar with the term. The story drew people’s attention to the two key attributes of this approach to investment: doing good and earning money doing so. Impact investing has since shed its niche image and become an established investment strategy. Nevertheless, a stubborn myth persists that investors sacrifice competitive returns when they invest to achieve a social and/or environmental impact. In fact, impact investing is all about the efficient interplay between measurable social or environmental benefits and profitable financial returns. Impact and returns are equally important components of the investment strategy. The majority of impact investing managers focus on competitive, risk-adjusted market returns. Of course, as in conventional investments, these returns may vary considerably depending on the asset class, investment strategy and fund manager.