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From Ideas to Practice, Pilots to Strategy II
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From Ideas to Practice, Pilots to Strategy II

Practical Solutions and Actionable Insights on How to Do Impact Investing

Abigail Noble, Marina Leytes, Ann Brady and Fabienne Stassen
World Economic Forum, 2014
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Editorial Rating

7

Qualities

  • Innovative
  • Applicable

Recommendation

Impact investing, the practice of investing in companies dedicated to furthering a social or environmental goal, is gaining traction. Contrary to popular belief, investing for social good does not necessarily mean sacrificing returns. In fact, many of these vehicles offer current yield, stability and, perhaps, modest growth. These features have attracted institutional investors for years, and now impact investment products with mass appeal are hitting the retail market. While this World Economic Forum study – edited by WEF’s Abigail Noble, Marina Leytes and Ann Brady as well as former WEF editor Fabienne Stassen – does a good job of assessing impact investing from a variety of standpoints, the quality of the writing is at best uneven, and some of the articles come uncomfortably close to pitching a product or service. Given that 16 experts contributed to the report, such pitfalls might just come with the territory. Nonetheless, getAbstract recommends this compendium to individual and institutional investors, brokerage firms, financial advisers, and others interested in the growing market for impact investments.

Summary

“From the Margins to the Mainstream”

Impact investing has moved from the fiscal fringes to the mainstream, as an increasing number of institutional and individual investors seek ways to realize a competitive investment return and, at the same time, advance their philanthropic objectives. A number of major features define the practice of impact investing, which incorporates various asset classes such as private equity and debt. The primary objective of an impact investment is to achieve some environmental or social goal. Thus, a drug company that produces a life-saving product mainly for financial gain would not qualify as an impact investment. The investment’s social benefit and profit both must undergo constant active measurement. Examining impact investing from a number of standpoints offers insight into how institutional and retail investors are putting it into practice.

Considerations for Institutional Investors

The impact investment unit of Prudential Financial Inc. integrates long-term private debt into institutional investors’ portfolios to deliver social benefits, enhance cash flow and boost current yield. Unlike venture capital or public market investments...

About the Authors

Abigail Noble is head of impact investment initiatives at the World Economic Forum, where Marina Leytes is project manager and Ann Brady is head of editing. Fabienne Stassen is a former chief editor at WEF.

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