Social Impact Investing

Impact Investments:
An emerging asset class
Global Research
29 November 2010
The theme of impact investing is also gaining increasing prominence in other
networks established either in narrower sub-sectors or in peripheral areas. The
International Association of Microfinance Investors (“IAMFI”) is beginning to
situate its members’ interests in a broader discussion of impact investing, as is the
PRI Makers Network, originally organized around the narrower interest of private
foundations making tax-privileged impact investments in the US. As the asset class
of impact investments gains prominence and coherence, we anticipate consolidation
among these networks that are currently broadening from a distinct niche into
increasingly duplicative activity.
Conferences: The Clinton Global Initiative, Skoll World Forum, Social Capital
Markets
Impact investing is becoming increasingly prominent at conferences that focus on
development, sustainability, and social enterprise, amongst other topics. The Clinton
Global Initiative has responded to increasing interest amongst its membership by
creating an Action Network focused on impact investing. Other conferences that
have featured impact investing include the Skoll World Forum in the UK, the Social
Capital Markets Conference in the US, the Sankalp Social Enterprise and Awards
Forum in India, the Take Action Conference in the US, and the European Venture
Philanthropy Association conference, which is hosted in rotating European countries.
Education: Impact investing now on business school syllabi
The themes of impact investing initially appeared in business school curricula
through a growing set of courses focused on green/sustainable investing and
microfinance. In 2002, Duke University initiated a Social Entrepreneurship course
with 421 students. The following year, Oxford University founded the Skoll Centre
for Social Entrepreneurship. While these courses initially focused on the business
management and entrepreneurial side rather than the buy-side considerations of
impact investors, in 2010, dedicated impact investing courses were taught at the
Northwestern University Kellogg School of Management, University of Michigan
Ross School of Business, and Stern School of Business at New York University. A
working group of professors teaching impact investing courses at business schools
formed in late 2010. Students in these programs, and consequently the new hires in
top firms, are beginning their careers with knowledge about both the attraction and
feasibility of integrating social and financial value in their professional lives. This
has impacted how many approach their career, driving them to seek ways to make
money and have social impact from the start rather than working to earn money first
before later “giving back”. The momentum for these types of courses at business
school and discussions of impact investing themes in on-the-job training will grow,
and we expect impact investing training will become increasingly important in
recruiting and retaining top talent to the sector.
Indicator #4: Encourage the development of standardized metrics, benchmarks,
and even ratings
Impact investment pioneers recognize the challenges of high transaction costs and
inefficiency inherent in operating in an emerging asset class. As they collaborate to
mitigate these costs, they are also working to build the basic infrastructure that will
facilitate the flow of capital into the sector.
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