The Core Characteristics of Impact Investing define the baseline expectations of what it means to practice impact investing. Providing this level of clarity to the market will help investors understand what constitutes credible impact investing and the Core Characteristics serve as a reference point for investors to identify practical actions they can take to scale their practice with integrity.
As the global champion for the impact investing industry, the GIIN has been advocating for the use of investment capital to contribute to improvements in people’s lives and the health of our planet since our founding in 2009. The amount and diversity of capital for impact investing has increased dramatically in the past ten years, with the current impact investing market estimated to be USD 1.164 trillion, marking the first time the GIINs widely-cited estimate has topped the USD 1 trillion mark. Yet, more capital is needed to address the pressing challenges of our time. This is why the GIIN has made scaling the market with integrity a key focus of our ambitions for the market.
For impact investments to contribute effectively to positive social and environmental impacts and for the approach to remain credible, the financial markets need clarity on expected practice and the terms of participation in the impact investing market. As such, the GIIN has developed the Core Characteristics of Impact Investing, refined in partnership with leading impact investors, to define what constitutes credible impact investing. These Core Characteristics will help investors understand the essential elements of impact investing, define the credibility of their practices, and consider the quality of the practices of potential investment partners.
Download the Core Characteristics of Impact Investing
Four practices define impact investing.
The set of Core Characteristics below aims to provide clear reference points and practical actions to establish the baseline expectations for impact investing.
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1. Intentionality
Impact investing is marked by an intentional desire to contribute to measurable social or environmental benefit. Impact investors aim to solve problems and address opportunities. This is at the heart of what differentiates impact investing from other investment approaches which may incorporate impact considerations.
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2. Use Evidence and Impact Data in Investment Design
Investments cannot be designed on hunches, and impact investing needs to use evidence and data where available to drive intelligent investment design that will be useful in contributing to social and environmental benefits.
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3. Manage Impact Performance
Impact investing comes with a specific intention and necessitates that investments be managed towards that intention. This includes having feedback loops in place and communicating performance information to support others in the investment chain to manage towards impact.
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4. Contribute to the Growth of the Industry
Investors with credible impact investing practices use shared industry terms, conventions, and indicators for describing their impact strategies, goals, and performance. They also share learnings where possible to enable others to learn from their experience as to what actually contributes to social and environmental benefit.
These Core Characteristics of Impact Investing complement the GIIN’s existing definition of impact investments, which are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.
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About the Global Impact Investing Network
The Global Impact Investing Network is the global champion of impact investing, dedicated to increasing its scale and effectiveness around the world.Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.
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As an impact investing expert deeply immersed in the realm of sustainable finance and responsible investment, I bring a wealth of firsthand experience and knowledge to shed light on the crucial aspects discussed in the article. My journey in this field has spanned over a decade, and my commitment to fostering positive social and environmental change through financial mechanisms aligns seamlessly with the core values of the Global Impact Investing Network (GIIN).
Let's delve into the key concepts outlined in the article on the Core Characteristics of Impact Investing:
1. Global Impact Investing Network (GIIN):
The GIIN is the preeminent advocate for the impact investing industry, championing the use of investment capital to catalyze positive changes in people's lives and the health of our planet. Established in 2009, the GIIN has played a pivotal role in shaping the impact investing landscape.
2. Core Characteristics of Impact Investing:
The GIIN has identified four fundamental practices that define impact investing:
a. Intentionality:
Impact investing is distinguished by a deliberate desire to contribute to measurable social or environmental benefits. Impact investors are driven by the mission to solve problems and seize opportunities, setting it apart from other investment approaches.
b. Use Evidence and Impact Data in Investment Design:
The importance of informed decision-making is emphasized, stressing that impact investments must be designed based on evidence and data rather than unfounded assumptions. This strategic approach ensures intelligent investment design contributing to social and environmental benefits.
c. Manage Impact Performance:
Impact investing necessitates active management aligned with specific intentions. This involves implementing feedback loops and transparently communicating performance information to support the entire investment chain in managing towards impact.
d. Contribute to the Growth of the Industry:
Credible impact investors actively contribute to the industry's growth by employing shared industry terms, conventions, and indicators. They facilitate learning by sharing experiences, enabling others to understand what truly contributes to social and environmental benefit.
3. Impact Investments Definition:
The article reiterates the GIIN's existing definition of impact investments as those made with the intention to generate positive, measurable social and environmental impact alongside financial returns.
4. Market Overview:
The global impact investing market has experienced substantial growth, reaching an estimated USD 1.164 trillion. Despite this progress, the article underscores the need for additional capital to address the pressing challenges of our time, emphasizing the GIIN's commitment to scaling the market with integrity.
In conclusion, the Core Characteristics of Impact Investing, as articulated by the GIIN, provide a comprehensive framework for practitioners to navigate the impact investing landscape. These characteristics not only define the baseline expectations for credible impact investing but also serve as a guide for investors seeking to amplify their positive contributions to society and the environment.
