So, what is impact investing? This module provides the answer and places impact investing in the context of traditional, responsible and sustainable investing. The module also introduces the ‘spectrum of capital’ – a vital aid in explaining impact investing to others – and gives a briefing on the development of impact investing over time and the key global frameworks and standards that govern the market. It also acknowledges some of the challenges that impact investing is addressing as well as the opportunities that are ahead. This section provides the foundational knowledge that you need before you can build your impact skills and expertise.

How to use these resources

Start at the beginning and read across each topic area before moving on to the next. There is no ‘bible’ yet for impact investing. Opinions differ and knowledge has been built up over time. The resources in this section are from authoritative bodies and have lasting value, but it is important to draw on a range of sources. Read this section before moving on to those on the purpose of impact investing and the impact investing market.

Resources

What is impact investing 

Impact investing definition (opens new window)

Global Impact Investing Network

Reading time: 3 minutes

The GIIN sets out the commonly agreed definition of impact investing together with the core elements. It also explains why people make impact investments and the types of investors who are doing this, with some examples and broader market information. It acts as a starting point to signpost people to other GIIN resources.

What the reviewer found helpful: “This was a one stop shop to get a quick overview of what Impact Investing is all about” Mhairi Littlewood

introductory
What is impact investing (opens new window)

Rockefeller Philantropy Advisors

Reading time: 10 minutes

The Rockefeller Advisors’ Philanthropy Roadmap gives a brief introduction to impact investing for asset managers to start implementing this strategy. This resource includes a few key definitions for the sector, an explanation of the spectrum of capital, and an explanation of why impact investing matters. It also discusses the projections for the sector, highlighting the benefits and potential challenges of adopting this impact-first investment approach.

What the reviewer found helpful: “Great resource to understand the basics of impact investing. It is concise and jargon-free.” Serena Grover

introductory RECOMMENDED READ

Impact investment in context of the wider investment landscape

Responsible, sustainable and impact investment (opens new window)

Pensions for Purpose

Reading time: 10 minutes

The slides are a useful summary of the current pension market and where impact investing sits in relation to traditional investing and philanthropy. It provides evidence to support values-based investments and gives examples of the types of equities, bonds and funds that could be included in an impact portfolio.

What the reviewer found helpful: “The slides contain some useful case studies that emphasise the positive impact a pension fund can have without sacrificing returns” Eilidh Anderson

introductory
Impact Investing in Practice (opens new window)

Triodos Bank

Reading time: 7 minutes

Explains how companies arrive at scores for Environmental, Social and Governance (ESG). Explains key elements of sustainable investment strategies and discusses how ESG ratings can be used to shape these across: ESG investing, ethical or negative exclusions and positive inclusionary / impact investing Uses real examples to explain each investment strategy.

What the reviewer found helpful: “Easy to understand and readable summary of ESG scores and how these can be applied in different investing strategies.” Mhairi Littlewood

introductory

The spectrum of capital 

Spectrum of Capital (opens new window)

Bridges Fund Management

Reading time: 3 minutes

Bridges Fund Management sets out how the capital market can be defined. This helps to distinguish between environmental, social and governance (ESG) investing, socially responsible investing (SRI), and impact investing. To illustrate the various types of capital, this resource also includes a short description of Bridges Fund Management’s multi-fund approach.

What the reviewer found helpful: “The visual representation of the spectrum of capital is very clear” Serena Grover

introductory
What is impact investment (opens new window)

British Venture Capital Association

Reading time: 5 minutes

BVCA’s website has a useful section outlining what impact investing is and where it overlaps with traditional investing and philanthropy. Its summarises charts from other impact organisations and introduces the reader to the UN Sustainable development goals. Page 2 is also a useful summary for beginners about measuring and managing impact.

What the reviewer found helpful: “This resource has a useful infographic describing the ‘Spectrum of Capital’ and the five steps towards an inclusive and sustainable economy” Eilidh Anderson

introductory
Guide to Classifying the Impact of an Investment (opens new window)

Impact Management Project

Reading time: 15 minutes

The Impact Management Project explains how to classify the impact of an investment using 1) impact and 2) input from investors. Explains how to evaluate impact (using what, who, how much, the enterprise contribution and the risk), resulting in impact being classified as ‘Act to Avoid Harm’, ‘Benefit Stakeholders’ or ‘Contribute to Solutions’. Explains how to evaluate the level of activity the investor will have to provide a rating/scoring for the input from investors. Frameworks and templates are included with scoring methods to work this out.

What the reviewer found helpful: “A useful and technical resource to help think about and evaluate the impact of an investment with helpful framework templates and scoring systems included”. Mhairi Littlewood

introductory

The defining characteristics of impact investing

Characteristics of impact investing (opens new window)

Global Impact Investing Network

Reading time: 1 minute

GIIN sets out four features of impact investing, helping to distinguish it against other forms of investing. These four characteristics are (1) Intentionality, (2) Evidence and Impact data in Investment Design, (3) Manage Impact Performance, and (4) Contribute to the growth of the industry.

What the reviewer found helpful: “The visual representation of impact investing asset classes” Serena Grover

introductory
Creating Impact:The Promise of Impact Investing (opens new window)

International Finance Corporation

Reading time: 5 minutes

The executive summary on page xi is a useful introduction to impact investing and highlights where it is different to value-aligned investment. Its highlights 3 observable attributes of impact investors: intent, contribution, and measurement. More experienced individuals can progress to chapters 1, 2 and 3 for an in-depth analysis of the impact market including helpful charts are particularly helpful at summarizing complex assets and returns

What the reviewer found helpful: “This is a useful definition of impact investing that focuses on the approach of the investor” Eilidh Anderson

introductory
Impact isn't ESG (opens new window)

M&G

Reading time: 12 minute video

In this interview, Investment Director, Veronique Chapplow discusses the different types of investment strategies within responsible investment. She tackles the jargon that often inhibits people from investing in this space. She also talks about impact investing and the four key principles that need to be involved to make something an impact investment.

What the reviewer found helpful: “A video interview that helpfully clears up common terms that are used in ESG, sustainability, ethical investing and impact.” Mhairi Littlewood

introductory RECOMMENDED READ

History of impact investing 

Impact Investing: a brief history (opens new window)

Bridges Ventures

Reading time: 20 minutes

Trelstad’s article explores the history of impact investing, and highlights some of the issues within the field. This article includes some of the key definitions that help to distinguish impact investing from other similar forms– something Trelstad believes financial professionals have a lack of clarity over.

What the reviewer found helpful: “A good preliminary resource to understand the basics of impact investing and some of the key factors preventing this strategy expanding more rapidly within the industry” Serena Grover

introductory
Roadmap for the Future of Impact Investing (opens new window)

Global Impact Investing Network

Reading time: 30 minutes

This is a very interesting summary impact investing industry and it explains how it has evolved since 2007 from uncoordinated innovation to building a marketplace. It also summarises the progress across three different platforms: intermediation, infrastructure and absorptive capacity.

What the reviewer found helpful: “The timelines on pages 33-35 provide a nice overview of the evolution of impact investing over the past 15 years, including key reports, policy changes and measurement landmarks.” Eilidh Anderson

intermediate
The History of Impact Investing with Antony Bugg-Levine - Social Capital Markets (opens new window)

Social Capital Markets

Reading time: 50 min listen

Antony Bugg-Levine of the Nonprofit Finance Fund speaks in this interview about the history and evolution of impact investing, as well as how this can be relevant in today.

What the reviewer found helpful: “A great listen about the history and evolution of impact investing as well as how it relates to modern issues and the pandemic.” Mhairi Littlewood

intermediate RECOMMENDED READ
The Risk of Impact: Five steps towards and inclusive and sustainable economy, Oct 2017 (opens new window)

Impact Investing Institute

Reading time: 25 minutes

The UK National Advisory Board for Impact Investing presents their five-step impact investing and purposeful business strategy to tackle some of the UK’s most significant societal issues, alongside boosting These five recommendations are listed below: 1. Adopt an inclusive and sustainable UK investment agenda 2. Empower savers to invest in line with their values 3. Put purpose at the heart of public procurement 4. Accelerate the rise of purposeful business 5. Strengthen the UK’s role in international development finance

What the reviewer found helpful: “This gives a clear overview of the impact ecosystem within the UK and strategies to scale-up” Serena Grover

intermediate RECOMMENDED READ

Key global frameworks and standards - UN SDGs, the Impact Management Project and the IFC standards 

Investing for impact: Operating principles for impact management (opens new window)

International Finance Corporation

Reading time: 15 minutes

The report summarises the key building blocks for a robust impact management system and act as a reference point against which funds and institutions may be assessed. The 9 operating principles covering each of the 5 steps in the investment process: strategy, origination and structuring, portfolio management, exit, and independent verification of signatories.

What the reviewer found helpful: “The operating principles for impact management include a helpful description of mitigating and managing ESG risks” Eilidh Anderson

intermediate
UN Sustainable Development Goals (SDGs) (opens new window)

United Nations

Reading time: N/A

The United Nations outlines their 17 sustainable development goals to achieve peace and prosperity for people and the planet by 2030. The goals were established in 2015, superseding the Millennium Development Goals.

What the reviewer found helpful: “This interactive resource makes it easy to understand each of the 17 SDGs and gain access to publications, events and actions to help achieve them” Serena Grover

introductory
Investing with SDG outcomes: A five-part framework (opens new window)

United Nations Principles for Responsible Investment

Reading time: 40 minutes

The framework helps investors understand the real-world outcomes of their investments and how to shape those outcomes to help meet the UN Sustainable Investing Goals (SDGs) The report explains how the UN SDGs go beyond ESG mitigation and provides examples of how that can used by investors.

What the reviewer found helpful: "There is a short and inspiring video that accompanies this report which summarises the current market and the 5 part framework” Eilidh Anderson

intermediate

Challenges  (definition, impact ‘washing’, measurement, myths) and opportunities (demand, data, policy support) and the evolving nature of the market 

Creating impact: the Promise of impact investing, (opens new window)

International Finance Corporation

Reading time: 90 minutes

Chapter 2 presents a deep dive into some of the challenges facing the impact investing world, exploring financial returns, impact management and frameworks, and regulatory barriers. Chapter 3 explores the scalability of the concept of impact investing and the importance of collective action and collaboration for the future.

What the reviewer found helpful: “A very detailed paper covering impact measurement theories and frameworks and using helpful diagrams to aid explanation.” Mhairi Littlewood

advanced
Annual Impact Investor Survey 2020 (opens new window)

Global Impact Investing Network

Reading time: 30 minutes

The GIIN’s 2020 Annual Impact Investor Survey details the investment activity of 294 leading impact investors, collectively managing USD 404 billion, over 2019 and forecasted into 2020. The survey has shown that impact investing has growth in depth and sophistication over 2010, with a rise in realised gross returns and assets over time and impact measurement and management practices.

What the reviewer found helpful: “The interactive charts were particularly useful for representing the impact investor survey data” Serena Grover

intermediate
Growing a culture of social impact investing in the UK - executive summary (opens new window)

UK Government

Reading time: 20 minutes

This report gives a background on the UK social impact ecosystem, the current challenges and some recommendations for the future growth. The recommendations clearly explain what government, regulators, professional bodies and the financial services industry can do to better the industry, outcomes and make it easier for people to invest. The report gives 5 key action areas including improving deal flow and improving reporting. The report sets these out in the context of a ‘virtuous cycle’ whereby rising demand from investors and advisor engagement together with a supportive regulatory environment leads to more quality products. This enables social purpose organisations to attract investment which increases the number and scale of investment opportunities. From this, advancement in impact measurement and reporting will spur further demand.

What the reviewer found helpful: “This is a really concise summary of how all organisations can contribute in a practical and achievable way” Eilidh Anderson

intermediate
From the Margins to the Mainstream (challenges: pp. 23-27) (opens new window)

World Economic Forum

Reading time: 10 minutes

Discusses the fact there are challenges faced by institutional investors that keep them from allocating capital towards impact investments. Most of these can be attributed to one of the four broad overarching challenges:: early-stage ecosystem, small average deal size, fit within asset allocation framework and double bottom line. When considering each of these, we must also consider the geography and that different types of institutional investors face different challenges.

What the reviewer found helpful: “A thorough summary of the challenges faced by institutional investors in impact investing, summarised clearly into four categories”. Mhairi Littlewood

intermediate

Terminology

Glossary of terms in the impact ecosystem (opens new window)

European Venture Philanthropy Association

Reading time: N/A

EVPA has created a glossary of key terms within the impact ecosystem. Key definitions are highlighted at the top of the site and all subsequent definitions are listed in alphabetical order.

What the reviewer found helpful: "This glossary really helps to create clarity in field suffering from an alphabet soup. Definitions are clear and concise.” Serena Grover

introductory
Glossary (opens new window)

Impact Management Project

Reading time: N/A

A comprehensive impact management glossary containing hundreds of terms The website provides a forum for building global consensus on measuring, assessing and reporting impacts on people and the natural environment. It is relevant for enterprises and investors who want to manage environmental, social and governance (ESG) risks, as well as those who also want to contribute positively to global goals.

What the reviewer found helpful: “This is a very useful glossary that has definitions ranging from the most basic to advanced financial and impact investment terminology” Eilidh Anderson

introductory RECOMMENDED READ
Understanding sustainable investing and ESG terms (opens new window)

Schroders

Reading time: 10 minutes

Includes comprehensive definitions of common terms in Sustainability, Governance & Active Ownership, Screened Investments, Thematic Investing, Impact Investing and Industry Organisations and Initiatives.

What the reviewer found helpful: “This is a helpful and comprehensive overview of acronyms and definitions that are useful in making sense of the ESG, sustainability and impact investing landscape.” Mhairi Littlewood

introductory RECOMMENDED READ

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