A fresh perspective on the social impact investing ‘definitions debate’

Image credit: Shifting Sands

This is a second guest blog post from Dr Jess Daggers, academic and practitioner specialising in impact measurement and the growth of the impact investing industry.

Many of the people reading this blog will have been in the same situation: you are at a conference, or a presentation, and you find yourself thinking: what exactly is impact investing? You thought you had a clear idea of it, but then the person on the stage is describing something that sounds quite different. Or perhaps a panel discussion brings together perspectives on the topic that appear to have almost nothing in common, except the general idea of combining financial return and social or environmental impact. More than a decade into this new marketplace for profiting while doing good, the field is still remarkably open to contrasting – and sometimes conflicting – versions of what we mean by impact investing.

This paper digs into the ‘definitions debate’. It argues that understanding why we cannot agree requires recognising that different individuals bring fundamentally different world views to the table. We can helpfully map out two contrasting types of world view – an ‘innovative world view’, which sees impact and profit as fully compatible, and a ‘principled world view’, which assumes being truly impact driven means being prepared to sacrifice financial returns. 

This way of framing the impact investing market helps us to see beyond the endless redefinition of terms to some of the more basic disagreements at play. 

In my other paper, the first in this series of two (also published on SVUK’s blog), I argued the risk of impact washing remains very high unless we clarify what it means to measure and manage impact. This paper contains a parallel argument: the continued inability to say with clarity what does or does not count as social impact investing entails a very high risk of impact washing. It means those with the loudest voices are at liberty to define, and redefine, what counts as social impact investing, in line with their own world view. 

Read Jess’ first guest post here.

Download the full paper here.

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