It feels like we’re at an important point in the evolution of impact investing. While the field has shown tremendous growth over the past few years, there are far more asset owners still sitting on the sidelines – interested in impact, but not yet investing. So why is it that – to quote the famous impact investor Bono – “they still haven’t found what they are looking for”?
There are a number of reasons why interest continues to outstrip activity. The most obvious is the lack of scaled investment products. But perhaps the most important is that we still haven’t clearly defined what we mean when we talk about impact.
There’s been a lot of progress made over the last decade on the question of impact measurement. But I would argue that the challenge is more about impact management.
Impact management is how asset owners articulate their impact objectives: where they want to invest, who they want to reach, what problems they want to solve, what risks they want to take. These preferences need to be translated into investment decisions and expectations about what impact information they expect to have reported.