Social Impact Investing

Impact Investments:
An emerging asset class
Global Research
29 November 2010
provide water to those below a given income level (our income bracket F from
Section 4. The potential BoP market opportunity), affordable business solutions
can be designed to reach some portion of that 900 million. Similar analysis shows
the opportunity for business to reduce the basic service gaps in education,
healthcare provision, and the other impact investment sectors.
3. Impact investments can spur economic growth, promoting a path out of poverty
The real goal for many in targeting impact investments toward the BoP+
population (BoP plus the underserved populations in developed markets), is to
promote a path out of poverty. While the literature remains inconclusive about
the poverty-alleviating power of economic growth alone, sustained economic
growth that ensures a reasonable distribution of surplus between poor customers,
suppliers and employees is a powerful anti-poverty engine. The development of
financially-sustainable businesses that provide affordable services and
employment is a critical component.
Rounding out our thoughts on this question is a concept inherent in our original
definition: The intent with which the business is designed. After all, if the business is
intended to help people while maintaining financial sustainability, we should hope
that the best efforts will be made to introduce cost-lowering solutions, increase
efficiency and charge reasonable (and not exorbitant) prices, sufficient to ensure the
financial sustainability of the business.
Despite these best efforts, impact investors will need to manage carefully the
political and social risks inherent in selling life-sustaining services to poor and
vulnerable communities. Having seen the risks that are more specific to impact
investments, we now return to the financial risks that are common to both impact and
traditional investments.
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