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178Impact Investment as a New Investment Class*
Michat FALKOWSKI, Ph.D. Candidate
University of Management & Finance in Warsaw, Business Analyst, Excelian Limited mfalkowski@poczta.onet.pl
Piotr Wisniewski, Ph.D.
Associate Professor, Department of Corporate Finance, Warsaw School of Economics piotr.wisniewski@sgh.waw.pl
Abstract. Impact investment has emerged as a socially aware response to contemporary socioeconomic challenges. The combined pursuit of investment efficiency with proactive furtherance of socially beneficial goals appears particularly relevant in an era of recurring risk aversion, capital volatility and stringency in public funding. This study sums up the early evidence of impact investment: its origins, philosophy, taxonomy and evolution. The key research dilemma addressed herein boils down to whether impact investment will transpire as a distinctive class of institutional financial management. The social arguments for its expansion are undisputable, however, to succeed in the long term impact investment will have to enhance its internal organisation and classification, improve reporting transparency and ensure lasting commitments from governments, international organisations and private contributors.
Аннотация. “Инвестиции влияния” (impact investments) возникли как ответ на социально-экономические вызовы нашего времени, для которого характерно стремление одновременно к росту эффективности инвестиций и к реализации общественно полезных целей. Данное исследование суммирует характеристики “инвестиций влияния”, включая их предысторию, философию, систематизацию и эволюцию. Главная дилемма исследования сводится к вопросу о том, смогут ли “инвестиции влияния” стать самостоятельным классом институционального финансового менеджмента.
Key words: institutional-, socially responsible-, alternative investment; social impact.
DEFINITION AND SIGNIFICANCE OF IMPACT investments
The investment process has varying associations in economics and finance. An investment can be defined as an asset or an item purchased in the hope of generating future returns or appreciating in value (Myles, 2003). In the economic sense, an investment is the purchase of goods not consumed today but rather used in the future to create wealth (TD Direct Investing,
2010). In finance, an investment represents a monetary asset purchased with a view of providing a future income or a capital gain (cf. Power Management Institute, 2011). Clearly, all the aforementioned approaches underscore potential future gains and highlight the financial aspects of investment commitments.
Evidently, the recent financial crises (e. g. the global economic contraction of 2007-2009 and the European sovereign debt woes) have shaken firmly established beliefs regarding the risk and return profiles of traditional investments. In the course of that period
investors had to very often reanalyse their portfolios as the firmly established risk-return spectrum (low risk — low return; high risk — higher return) turned out to be irrelevant to the market events of that time. During those recent economic depressions, global stock markets have contracted dramatically, large financial institutions have collapsed or have had to be salvaged, and governments (even those of the wealthiest nations) have had to concoct rescue packages to bail out their decrepit financial systems. However, despite cross border rescue actions financial markets still remain quite volatile mainly due to uncertainty regarding the stability of the world economy which has its impact in the overall risk aversion of institutional and individual investors. In such challenging circumstances, both institutional and individual investors tend to seek alternatives in their traditional portfolios. One of the novel (but still marginal in magnitude) investment styles is the so-called “impact investment”.
According to different sources impact investment, often referred to as “social investment” or “sustainable
* «Инвестиции влияния» как новый инвестиционный клак
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investment”, is defined as actively placing capital in businesses that generate social and/or environmental good and at the same time provide a range of returns, from principal to above market performance (cf. Monitor Institute, 2009). Another definition labels impact investments as capital deployed to seek both positive social outcomes and financial returns (Evenett, Richter,
2011). According to a 2010 J. P. Morgan report, impact investments are investments “intended to create positive impact beyond financial return” (O’Donohoe et al. 2010). As such, they require the balancing of social and environmental goals in addition to financial risk and return. As per the Global Impact Investing Network (GIIN), impact investment strategies range from the simple return of principal capital to offering market rate or even competitive market financial returns to investors (Global Impact Investment Network 2009). The Centre of Global Development (Simon and Barmeier, 2010) mentions another feature of impact investing. They claim that impact investment provides capital to businesses that target environmental and social issues that are not targeted by current official development efforts or traditional private investors. Hence they state that impact investing should be additional to commercial funding. Otherwise there would be no need for the impact investors that target the spectrum of capital between philanthropy and traditional commercial investing. However the feature of additionally seems to be less often referred to by other reports on impact investing.
Despite various attempts at defining impact investment as an emerging asset class, it is important to distinguish it from the (by far more established) notion of Socially Responsible Investment (SRI), which generally seeks to minimise negative impacts rather than proactively effect positive social or environmental changes (cf. Viviers et al., 2009). SRI has historically been described as financing companies that favour strong environmentally and socially aware policies and that abstain from socially costly industries, such as alcohol, tobacco, gambling or weaponry (Pan, Mardfin, 2001). As SRI are identified by screening out (“negative screening”) companies or industries with bad environmental protection histories they do not seek to promote business models that by their nature deliver positive social benefits. Social entrepreneurship refers to the creation of new approaches to attack social problems. Such models are often not-for-profit and seek grant capital instead of investment.
Since impact investment has often been erroneously labelled merely as a subclass of SRI, it is worth reiterating that impact investing contrasts with SRI by virtue of the intent and primary purpose of investment allocation. In implementing a passive strategy
that excludes certain portfolio elements basing on a predefined set of criteria, SRI mainly aims for financial returns while endeavouring to accomplish some other (but not necessarily social and/or environmental) objectives.
To highlight the above-mentioned difference between SRI and impact investments we can emphasize some of the main goals of JP Morgan Urban Renaissance Property Fund that targets urban development and redevelopment of affordable housing using “green” specifications from solar heating to recycled building materials. As an example of impact investments the fund had raised approximately US$175m and is targeting market rate returns, with a projected return of ~15% net of fees. As part of an on-going support of local communities, in its activities the fund is also including cultural amenities such as partnering with after-school educational providers (Bridges Ventures,
2010).
The key characteristics highlighting some differences between impact and social responsible investing are summed up in Figure 1.
Currently, most impact investments tend to operate as private undertakings. Most allocation activities in publicly tradable equities that incorporate social or environmental goals will take the form of socially responsible investment, in which investors seek to reduce negative effects rather than proactively create beneficial ones. However, as the market matures it is likely that broader based initiatives will become available and gain visibility.
Additionally, every investment that is supported by external capital should have precisely specified objectives orientated towards positive social or environmental impacts, and they should be clearly stated in corporate documentation (e. g. the articles of association) at the outset. The envisaged impact is most likely to be brought about via business operations and products or services engendered or facilitated by way of such investments. The business should also have a system in place to measure the impact (Bridges Ventures, 2010).
Yet, the key driver of impact investors’ success is aspiration to deliver competitive financial returns.
From investors’ perspective we could say that any return on impact investment that is above a riskfree rate is satisfactory. However having said that we have to take into account impact investments’ potential in generating rates of return. In this context we would expect that investments in this type of asset class would perform way above the zero risk rate and generate investor’s profit, which resembles markets performance. This goal should coexist with the commitment towards positive impacts, though investors
Investments intended to create positive impacts beyond financial returns
Provide capital
■ Transactions currently tend to be private debt or equity investments
■ Expected more publicly traded investment opportunities emerging as the market matures
Generate positive social and/or environmental impacts
■ Positive social and/or environmental impact should be part of the stated business strategy and should be measured
Business designed with intent
■ The business (fund manager or company) into which the investment is made should be designed with the intent to make a positive impact
■ This differentiates impact investments from investments that have unintentional positive (social or environmental) consequences
Expect financial returns
■ The investment should be expected to
return at least nominal principal
■ Donations are excluded
■ Market-rate or market-beating returns are within scope
Figure 1. Defining impact investing.
Source: O’Donohoe, Leijonhufvud and Saltuk, 2010, p. 14.
might pursue varying weightings of both objectives in their overall strategies. In fact, the pairing of these two motivations by investors is possible to encourage businesses to develop in financially sustainable ways, thus facilitating the growth of the impact delivered by those businesses (O’Donohoe et al., 2010).
By leveraging the private sector, impact investments can provide financings on a scale that philanthropic initiatives are unable to support. Investors in impact investment funds can include high net worth individuals (HNWIs) as well as foundations flexible enough to allocate their assets under management to a wide range of investment classes. Basing on a study by the Monitor Institute (Freireich, Fulton, 2009), participants in impact investing can be categorised by their primary motivation for investing as “financial first” or “impact first”. The following figure demonstrates the segmentation of impact investors by strategic preferences.
In line with the aforementioned taxonomy, “financial first” investors seek to balance out financial returns with social/environmental impacts. This group tends to comprise commercial investors searching for investment vehicles offering returns implicating the opportunity cost of capital, while yielding some social/ environmental benefits (Freireich, Fulton, 2009).
Conversely, “impact first” investors seek to combine a high proportion of social or environmental effects with some financial returns. This group pro-
motes social/environmental good as the overriding objective and may be willing to accept a spectrum of satisfactory returns: from mere principal protection to beating predefined “hurdle rates”. This group is willing to accept a lower than market rate of return in investments that may be perceived as higher risk (in order to help reach social/environmental goals that cannot be achieved in combination solely on the basis of market rates).
On occasion, both groups of investors will collaborate in what is termed as “layered structures” (also termed “Yin-Yang” investments). Layered structures occur when the two types of investors join forces, amalgamating capital from the “impact first” and “financial first” segments, pooling various types of investment sources with different agendas and motivations. In such deals, “impact first” investors accept a sub-market, risk-adjusted rate of return enabling other tranches of the investment to become attractive to “financial first” players. This symbiotic relationship permits “financial first” investors to achieve market rate returns, and “impact first” investors to leverage their investment capital, thus producing significantly more social impact than they would if investing singlehand-edly (Bridges Ventures, 2010a).
The use of various financing sources development has transformed over the past decade. Capital flows derived from the private sector have gradually supplanted foreign aid and private philanthropy. Such a
High
None
Solely profit maximising investing
Financial floor
Financial First Investors
Optimize financial returns with an impact floor
Impact First Investors
Optimize social or environmental impact ^^ith a financial floor ^
None Target: Social and/or Environmental Impact
Figure 2. Impact investment value chain. Source: Freireich, J., Fulton, K., 2009, p. 33.
High
tendency has also affected impact investments that have been re-orientated towards more recourse to private funding.
Despite the recent turmoil in global capital markets, the do-good momentum behind the impact investment process is unlikely to be as affected as are other segments of the financial industry (inter alia thanks to a more arbitrary decision-making process). While the basic institutional infrastructure of impact investment is still evolving, this financial class is becoming a distinctive and sustainable alternative to institutional investors and high net worth individuals. As its infrastructure matures and more funds consistently beat market driven hurdle rates, the impact investment segment is poised to become a powerful force able to address both significant social and environmental issues and chart a new course for the financial services industry at large.
impact investment origins and taxonomy
It is fair to say that, historically, philanthropy served as an attempt to minimise the negative social outcomes of human poverty. As a form of donation (whether it is money, property or services), philanthropy has been instrumental in mitigating social or
environmental inequalities and helping those who are unable to fend for themselves. Philanthropists have usually come from high net worth individual circles and have operated through charities seeking to combat a variety of social challenges.
Alongside philanthropy, one can also distinguish social responsible investment (SRI). The origins of SRI are likely to date back to 1758 when the Quaker Philadelphia Yearly Meeting prohibited members from participating in the slave trade (the buying or selling humans) (The Ethical Partnership, 2001; Quakers in Britain, 2012).
One of the earliest and most eloquent adopters of SRI was J. Wesley (1703-1791). J. Wesley’s sermon entitled “The Use of Money” (2002) outlined a first set of principles behind social investing, essentially prohibiting to harm your fellow citizen while conducting your business and avoiding industries (such as chemical production), which can harm the health of workers. Additionally, it is worth pointing out that in the early days of SRI some of its prominent epitomes were strongly motivated by religious beliefs. Their advocates would try to persuade investors to avoid “sinful” stocks, e. g. those associated with products such as guns, liquor or tobacco. The overall history of individual investors’ awareness of socially responsible capital allocation (usually avoiding exposure to predefined
companies or activities whose social effects are considered negative) is thus well established (cf. Fabretti, Herzel, 2012).
The ascent of ethical investing in the 1980s gave further momentum to the development of impact investments, as did a proliferation of corporate social responsibility (CSR) programmes. The emergent approaches tended to challenge the longstanding concept (propagated by M. Friedman) that the sole responsibility of companies (and the goal of their shareholders) is to maximise financial returns (cf. Fre-idman, 1970). In sharp contrast to that notion, social investors and businesses have increasingly articulated and emphasised their varying contributions to social enhancement and promotion of sustainable environmental practices, while delivering on their financial objectives.
Since the 1980s, SRI has focused on disregarding investments whose business practices do fit in with the investor’s present criteria of eligibility and favouring those compliant with such pre-established rules.
While large scale initiatives — such as portfolio diversification among eligible investments or emphasis on environmental, social and governance (ESG) criteria (Financial Times Lexicon, 2012) — have played substantial roles in the social investment process, less conspicuous and local initiatives have coexisted. Among them have been community investments, which have usually involved economically targeted investments (ETIs) (Shareholder Association for Research & Education, 2008) that channelled funding to community-orientated entrepreneurs and enterprises via local institutions — such as community development banks, credit unions or venture capital funds as well as venture lending (Strandberg et al., 2004).
The unique attitude represented by social investors is centred on willingness to align their investment activity with independently defined interests, as in “mission based investing” (MBI) and “programme related investing” (PRI). Approaches like “double-” and “triple bottom line” investing (the three bottom lines, otherwise referred to as the “three pillars” and consist of three “P”s, i.e.: people, planet, profits. The underlying philosophy is combining the financial, social and environmental performance of the corporation over an extended period of time) have explicitly given evenly balanced prominence to financial and social/environmental goals (Phillips, Hager and North Investment Management, 2010).
A landmark event in the development of impact investments was the arrival and spread of microfinance. It gained visibility at the turn of the millennium and has since promoted socio-economic development at grassroots level by providing lending to the underpriv-
ileged. The lending is usually small and is accompanied by a repayment plan intended to deliver a modest return to the lender. As such, microfinance directs funds to social enterprises and fosters economic activity among the poorest strata of human populations in an effort to empower them and help them better handle crises and adversity (Phillips, Hager and North, Investment Management, 2010).
As social investments were gradually making a footprint on the global investment map, in 2003 J. Emerson introduced the term “blended value investing” (BVI) to illustrate the combination of investment and philanthropy (Godeke, Pomares, 2009). In line with this concept, BVI has offered a range of risk reward profiles and different types of social and environmental value creation models globally — while also seeking positive financial returns.
Progressively, impact investments have become to be understood in conformance with J. Emerson’s approach, interweaving numerous investment activities with social and environmental purposes that also contained an element of financial reward (cf. Emerson, Spitzer, 2006).
Today, numerous institutions around the globe are experimenting with novel forms of investment designed to generate both competitive returns and positive social and environmental transformations. The idea of using “for profit” investment strategies for a dual purpose has shifted from the periphery of finance to its mainstream. Environmentally and socially intelligent business decisions, previously marginalised by unconvincing strategic and financial rationales, are now coming to the fore. More and more often, institutional investors are no longer asking if, they are asking how to deploy their capital.
current market trends and CHALLENGES TO IMPACT INvESTING
The recent economic crises have undermined confidence in well-established investment ideologies and their ardent advocates. The emergence of impact investing provides a compelling alternative, by offering investment exposure in conjunction with a social dimension and, ultimately, by broadening the scope of investment solutions able to address global economic problems (whose magnitude and complexity continue to soar).
Beyond the pure social significance, the impact investment universe is evolving as a partial remedy to challenges progressing within the institutional management industry per se. These constraints relate to the unhindered expansion of exchange traded funds (ETFs) and index funds, an over-reliance on algorith-
mic (automated) trading and an ever more potent role of behaviourisms in investment allocations (cf. Hott, 2007). The resultant rise in intra- and inter asset correlations complicates the use of the modern portfolio theory and makes out a powerful case for diversifying into new asset classes, including impact investments (cf. Masemer, Ballin, 2012 and Ang, Bekaert, 2002).
Conventionally, capital has been allocated either to optimize risk-adjusted returns with no specific interest in social benefit, or donated to optimize social impact (with no expectation of financial return). This has now changed with the advent of impact investments. While government or philanthropic solutions will sometimes provide these goods or services (such as healthcare or education), impact investment can complement government and philanthropic capital to reach out to more people. Recognizing that charitable donations will never attain the scale needed to address global problems, impact investment introduces a new type of capital merging both motivations.
Numerous investors and financial institutions remain optimistic about the potential for growth in the impact investment market, simultaneously acknowledging that the industry is still in its infancy. As highlighted in the J. P. Morgan report (Saltuk et al., 2011), its respondents believe that the number of random institutional or high net worth individual investors who currently identify and recognise impact investments has doubled over the past two years. Nonetheless, three-quarters of respondents would still describe the current impact investing market as embryonic, rather than something in the phase of rapid expansion. The following figure demonstrates the distribution of responses collected as part of this survey.
The same study has indicated that investors intend to allocate (to impact investments) a total of US$3.8bn in the 12 months following the analysis. As the following data indicate, the average and median per investor amounts total US$75m and US$25m, respectively. Interestingly enough, amounts of capital dedicated to impact investments are evenly distributed, including a single investor who planned to allocate up to US$1bn over the 12-month period. In addition, we can observe a particularly wide dispersion in the number of investments made by respondents covered by the survey.
The aforesaid data might suggest that impact investments are already widely acknowledged by financial market players and constitute a new class of alternatives to traditional capital allocation. However, the important question at this stage is whether impact investment can be referred to as a standalone class of institutional investment — to begin with.
Prior to an answer, it is important to define an asset class per se. Basing on a general approach, an asset
class is a broad group of securities or investments that tend to react similarly in different market conditions. Individual asset classes are also routinely governed by the same rules and regulations. Oftentimes, three basic asset classes are distinguished: equity securities (stocks), fixed-income securities (debt) and cash equivalents (money market investments). Real estate, commodities and derivatives (and their combinations) are also considered asset classes by some theoreticians and practitioners (Financial Times Lexicon, 2012).
The Chartered Financial Analyst (CFA) Institute uses a definition that reflects financial characteristics of a given set of assets. From that perspective, an asset class will typically:
• include a relatively homogeneous set of components,
• be mutually exclusive,
• be diversifying,
• as a group, make up a preponderance of worldwide investable wealth,
• have the capacity to absorb a significant fraction of an investor’s portfolio without seriously affecting the portfolio’s liquidity (CFA Program Curriculum Volume 3 in O’Donohoe et al., 2010).
It is clear that all the above-mentioned traditional assets such as stocks or bonds meet the conditions requisite of asset classes. The current state and nature of the impact investment market permits us to say that those undertakings also merit identification as an alternative class of assets. As undoubtedly professional in nature, impact investments require a various set of allocation exposure as well as risk management skills. In its origins, impact investing emerged from the entrepreneurial initiatives of professionals integrating the investment discipline of financial services firms with the social focus promoted by foundations and charities. While these individuals began their part time impact investing within a broader and more traditional professional practice, they increasingly started to organize themselves into distinct structures that enable dedicated attention and cultivate impact investing (O’Donohoe et al., 2010).
Defining impact investments as an asset class within the alternative investment segment is most likely to spur asset growth, as historically observed in the case of hedge funds, private equity funds and commodity speculators. Recognizing impact investment as an asset class will enable asset managers and investors to develop unique skills to implement and manage impact investments, streamline their operations and develop standards and benchmarks to enhance transparency and performance.
The survey by J. P. Morgan quizzed institutional and high net worth individual investors as to their
About to take off
A lot of talk, not much action
In its infancy and growing
Figure 3. The current state of the impact investment market. Source: Global Impact Investing Network, J. P. Morgan, 2011, p. 5.
approach to impact investments. For research clarity, data on impact investing have been split into the developed markets (DM) and emerging market (EM) categories.
The following figures intriguingly demonstrate how impact investors’ return expectations are shaped across the developed and emerging markets, as well as broken by traditional asset classed: either debt or equity. The data show a conspicuously high variance between markets and instruments. Figure 4 portrays the distribution of return expectations for developed market debt investments, while Figure 5 does the same for emerging market debt investments. Figure 6 and Figure 7 illustrate the expectations for developed market and emerging market equity exposure.
While we can discern a much broader distribution of expectations in equity exposure than in debt allocations, the total number of investments made shows alone a greater motivation to balance strong financial returns with social impact.
One of the key characteristics of the current impact investment landscape is the small average deal size. The following figures demonstrate investment size ranges. Figure 8 shows a further breakdown of
the last bar contained in Figure 9 (where deals were larger than US$5m). As evidenced by the charts, we can observe that the dominant magnitude of investments came to US$1m or less. Only 35 of the 1,105 deals reported under the survey surpassed US$10m (in notional value).
The small average size of impact investments might indicate that the market for those types of allocation is not yet fully developed. At the current stage, investments can be less liquid and incur higher costs and risks. The relatively small average deal size could result from the over-sampling of early stage impact investors (that have tended to target more socially focused businesses and have been willing and able to shoulder the relatively high transaction costs associated with small scale commitments). As impact investing matures and more institutional investors (having a bigger return appetite) climb on the bandwagon, we can anticipate a proliferation of investment fund openings, intense pooling of their capital resources (e. g. via syndication) and a larger average size of deals. The average transaction is thus set to expand, as the industry comes of age and fund vehicles facilitate larger deals (Saltuk et al., 2011).
Table 1. Investment track record and pipeline as of September 2011
Size Planned investments for the following year (US$m) Investments made since inception (Number)
Mean 75 9
Median 25 29
Max 1,000 1,500
Min 0 2
Source: Global Impact Investing Network, J.P. Morgan, 2011, p. 5.
Figure 4. Expected returns - Developed markets debt investments. Total number of investments = 219; Total size of investments = US$524m Source: GIIN, J. P. Morgan, 2010, p. 33.
THE FUTURE OF IMPACT INVESTMENT
As aforementioned, impact investment plays a vital role in the furtherance of socially productive initiatives, so moral arguments for its future expansion are potent. However, to make it a full-fledged and viable class of institutional investment, the following prerequisites have to be addressed early on:
• Clear-cut classification: as in other (more established) classes of investment management there needs to be a more in-depth conceptual classification (including but not limited to percentage weightings of social and investment strategies/styles) of
entities active in the impact investment community, such a move would help further define their competences and would (to a large extent) determine the success of future impact investment ventures;
• Transparency: historically, the impact investment business has been relatively opaque, which has hampered its growth; to attract a wide array of committed contributors from the public and private sectors, impact investment will have to upgrade its accountability with particular emphasis on information disclosure regarding impact investors’ ownership composition, management structure, investment history, portfolio allocation, compensation mechanisms, busi-
Figure 6. Expected returns - Developed markets equity investments. Total number of investments = 91; Total size of investments = US$320m Source: GIIN, J. P. Morgan, 2010, p. 33.
ness ethics, strategic/tactical objectives as well as potential conflicts of interest between financial and social goals; cf. the Linaburg-Maduell (sovereign wealth fund, SWF) Transparency Index (Linaburg-Maduell, 2012);
• Reporting standards: a critical aspect of impact investors’ growing appeal to public and private capital providers is consistency and regularity in reporting composite (social and investment performance). The convenient starting point would be the adoption and promulgation of Impact Reporting and Investing Standards (IRIS) pioneered in 2011 (IRIS,
2011), however, this investment genre should in the long run develop a series of segment specific bench-
marks (tied to the subsets broken down by percentage financial/impact proportions and categorised by social impact types) that would enable the calculation of risk and socially adjusted measures of investment efficiency (cf. Fishburn, 1977);
• Structural and cohesion funding: no matter how transparent, well organised and business friendly impact investors become, they run the risk of lagging behind other types of collective investment vehicles in absolute performance (for reasons of socially relevant costs that regular investors do not have to bear); in recognising the beneficial and socially constructive roles played by impact inves-
Figure 8. Distribution of investment sizes across reported investments. Number of deals per bucket; bucket sizes shown in US$m. Source: GIIN, J. P. Morgan, 2010, p. 35.
tors (e. g. a more efficient use of resources than in regular philanthropy), governments and international organisations should consistently support (among others via direct subsidising) their expansion;
• Lobbying and networking: evidently, the impact investment community has not yet achieved the global visibility and leverage needed to attract reliable capital infusions from other (more established) financial institutions that adopt socially responsible investment attitudes. Given the growing interdependence of institutional investments impact investors need to become more assertive in originating financing (also through various forms of syndication).
CONCLUSION
Impact investment, despite a relatively limited record of activity, is emerging as a promising class of financial management. Its exceptional character combines the active pursuit of social goals with a sober focus on investment efficiency. Based on the analysed characteristics we can be sure that impact investments are able not only to benefit targeted societies but provide investors with diversification, risk management and compound return producing tools. The outlook for impact investing remains optimistic (despite recurring fears of macroeconomic volatility and risk aver-
sion). Yet, to realise its full potential, impact investment needs to reform its internal organisation, achieve greater transparency and integration, as well as to promote its agenda locally and globally to policymakers and institutional investors.
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