Impact investing is the practice of investing money into companies, organizations, or projects that have a positive social or environmental impact. The goal of impact investing is to not only generate a financial return on investment, but also to create a positive impact on society or the environment.

For example, an individual may invest in a solar energy company that is working to reduce carbon emissions and promote renewable energy sources. The investor would not only be earning a financial return on their investment, but also contributing to the fight against climate change.

Another example of impact investing would be investing in a community development finance institution that provides loans to small businesses in low-income communities. This investment would not only generate a financial return, but also help to promote economic development in underprivileged areas.

Overall, impact investing is a way for individuals and organizations to align their financial goals with their values, and make a positive impact on the world while also earning a return on their investment.

Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending on investors’ strategic goals. 

1.  INTENTIONALITY An investor’s intention to have a positive social or environmental impact through investments is essential to impact investing. 
2. INVESTMENT WITH RETURN EXPECTATIONS Impact investments are expected to generate a financial return on capital or, at minimum, a return of capital. 
3. RANGE OF RETURN EXPECTATIONS AND ASSET CLASSES Impact investments target financial returns that range from below market (sometimes called concessionary) to risk-adjusted market rate, and can be made across asset classes, including but not limited to cash equivalents, fixed income, venture capital, and private equity. 
4.  IMPACT MEASUREMENT A hallmark of impact investing is the commitment of the investor to measure and report the social and environmental performance and progress of underlying investments, ensuring transparency and accountability while informing the practice of impact investing and building the field. 

Investors’ approaches to impact measurement will vary based on their objectives and capacities, and the choice of what to measure usually reflects investor goals and, consequently, investor intention.