Impact investing is a form of investment which has risen to prominence in recent years. Compared to other forms of socially responsible investment, impact investing focuses on measuring the social and environmental return that it generates. A great deal of effort has been undertaken to develop effective measurement systems, but still significant confusion remains around the notions of ‘non-financial return’ and ‘impact’, and their assessment in practice.
This paper, available in full length and summary versions, draws on a range of relevant literature as well as the authors’ previous practical experience to provide an overview of underlying concepts, and casts a critical eye on the roles and responsibilities within measurement, making more explicit the subjective interpretation of social and environmental return (SER) by investors, and the clash of suppositions taken from other older measurement traditions. It investigates some of the tensions around breadth of coverage, participation and objectivity, rigour and flexibility, attribution of impact, and the very concept of ‘a return’ itself which currently surround practical measurement.
It explores how measurement does not yet appear to have found a pragmatic, participative, systematic way forward, and identifies key research areas that need to be addressed to advance knowledge in this field.
These reports are part of a series: further empirical data collection and analysis will be undertaken in subsequent reports.