Social Impact Investing

Executive Summary
Why Impact Investments?
Governments and charities do not have sufficient capital nor the complete skill
set required to solve the world’s pressing challenges. At the same time, the
recent economic crisis has shaken established orthodoxies about the risk and
return profiles of traditional investments. The Impact Investment sector is emerging
as a partial answer to the twin challenges that these two realities present:
Impact Investment unlocks substantial capital to build a more sustainable and
equitable global economy while allowing for diversification across geographies
and asset classes.
A plethora of investments is emerging across multiple asset classes that provide
investors with market-rate investments, or for more altruistic investors, substantial
social impact, while still generating positive financial returns. The old binary
system—the widely-held belief that for-profit investment could only maximise
financial return while social purpose could only be pursued through charity—is
breaking down.
Who is this report for?
This report is intended for the investment community and aims to help investors
understand this emerging industry. Many investors have begun to explore
Impact Investments by investing in microfinance in developing countries or community
development projects in the US. However, there is still a perception that
Impact Investment always entails a sub-market financial return, which this report
demonstrates is far from the case. For example, Lyme Timber, a forestry fund
based in Hanover, New Hampshire, has been able to utilise conservation contracts,
partnerships with the Nature Conservatory, and deep industry experience
to invest in sustainable forestry projects throughout the US. These projects help
conserve local forests, while delivering market to above-market returns to their
investors.
Meanwhile, the industry is developing globally and the financial products available
for investors are diversifying. Investments range from tropical rainforest
preservation in South America, to finance for charities in the UK, to low-income
housing development in New York City, to infectious disease prevention in Africa.
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Investing for Impact: Case Studies Across Asset Classes