Responsible investing (which I define to include ethical, sustainable, impact and social investment) and the pursuit of profit with purpose has grown exponentially in recent years. It has many supporters who believe business and investment can be a force for good and help contribute solutions to our pressing environmental and social challenges.
In previous articles, we have defined impact investing as: “investments made into companies, organisations and funds with the intention to generate positive, measurable social and environmental impact alongside a financial return”1. We have also touched on the distinction between finance-first and impact-first investment strategies.
Ceniarth is a family office that has focused on impact first investing. Impact first means (as it implies) that the desire for impact is greater than the desire for financial return. The acceptance that there are trade offs to be made between impact and financial return, reflects our own view, particularly in the social impact arena. Many in the so-called “impact investing” space argue that such trade-off’s do not exist; we would argue that they are “finance first” investors, rather than true impact investors.
In the first article in this series, we looked at the Impact Investing Institute’s Spectrum of Capital and the ABC methodology that classifies investments as avoiding harm, benefitting stakeholders and contributing to solutions.
The definitional challenge: impact investing
“Impact Investing” is a term first used by the Rockefeller Foundation in 2007. A definition from the Global Impact Investing Network in 2009 is of:
“investments made into companies, organisations and funds with the intention to generate positive, measurable social and environmental impact alongside a financial return”.