What is Impact Investing?
Where Financial Returns Meet Social Impact
The Global Impact Investing Network (GIIN) defines "Impact Investments” as investments made into companies, organizations and funds with the intention to generate social and environmental impact alongside a financial return. Impact Investing has emerged as a shift from the decades-old notion that addressing social challenges is restricted to government or philanthropic endeavors.
On the contrary, investments in businesses that provide solutions for social issues provide diverse and viable opportunities for investors, including fund and wealth managers, insurance companies, institutional investors, development finance institutions and philanthropic foundations.
Impact Investments share three core characteristics:
- Profitability: an investor´s expectation to generate a financial return on their capital
- Intentionality: an investor´s aim to address a social or environmental challenge
- Measurement: a methodology for evaluating impact performance
These investments exist across a range of asset classes and risk-return profiles, including but not limited to, venture capital, private equity, cash equivalents, real assets, debt instruments and SFI´s flagship investment vehicle, the Social Impact Bond.
Fundamental to the practice of Impact Investing is a commitment to measure and report the social and environmental performance of the underlying investments. There are a variety of approaches to impact measurement, based on investor objectives, organizational capacities and specific impact intentions. The diversity in return expectations among Impact Investors are reflected in the range of Impact Investment vehicles.
How do Impact Investments perform financially?
Finance Israel is the driving force behind a developing Impact Investing sector
in Israel. SFI has consistently pushed the sector forward, facilitating the involvement of previously inactive
players in Israel´s Impact Investing field. To that end, SFI has
worked with lawmakers, community development organizations, foundations, fund
managers, insurance companies, and others, to devise and administer investment vehicles that share the three
core characteristics of Impact Investing.