As the global champion for the impact investing industry, the GIIN has been advocating for the use of investment capital to contribute to improvements in people’s lives and the health of our planet since our founding in 2009. The amount and diversity of capital for impact investing has increased dramatically in the past ten years, with thecurrent impact investing market estimated to beUSD 1.164 trillion,marking the first time the GIINs widely-cited estimate has topped the USD 1 trillion mark. Yet, more capital is needed to address the pressing challenges of our time. This is why the GIIN has madescaling the market with integritya key focus of our ambitions for the market.
For impact investments to contribute effectively to positive social and environmental impacts and for the approach to remain credible, the financial markets need clarity on expected practice and the terms of participation in the impact investing market. As such, the GIIN has developed theCore Characteristics of Impact Investing, refined in partnership with leading impact investors, to define what constitutes credible impact investing. These Core Characteristics will help investors understand the essential elements of impact investing, define the credibility of their practices, and consider the quality of the practices of potential investment partners.
Four practices define impact investing.
The set of Core Characteristics below aims to provide clear reference points and practical actions to establish the baseline expectations for impact investing.
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1. Intentionality
Impact investing is marked by an intentional desire to contribute to measurable social or environmental benefit. Impact investors aim to solve problems and address opportunities. This is at the heart of what differentiates impact investing from other investment approaches which may incorporate impact considerations.
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2. Use Evidence and Impact Data in Investment Design
Investments cannot be designed on hunches, and impact investing needs to use evidence and data where available to drive intelligent investment design that will be useful in contributing to social and environmental benefits.
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3. Manage Impact Performance
Impact investing comes with a specific intention and necessitates that investments be managed towards that intention. This includes having feedback loops in place and communicating performance information to support others in the investment chain to manage towards impact.
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4. Contribute to the Growth of the Industry
Investors with credible impact investing practices use shared industry terms, conventions, and indicators for describing their impact strategies, goals, and performance. They also share learnings where possible to enable others to learn from their experience as to what actually contributes to social and environmental benefit.
These Core Characteristics of Impact Investing complement theGIIN’s existing definition of impact investments, which are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.
