The definition of impact investment is still in flux, which contributes to confusion in this space. CAPS defines impact investment as purposive investment into a business that creates products or services addressing unmet needs. Put simply, impact investors look to contribute towards social/environmental causes while simultaneously receiving a financial return. The latter is what differentiates impact investment from traditional philanthropy (see graphic above). Impacts can be made in social enterprises that have the dual goal of returning a profit and providing a social good. This is sometimes called the “double bottom line”. Different investors seek different returns, from recouping the cost of investing to returns at full market rates.
Impact investment has the potential to drive even greater change in the region. An estimated US$502 billion is being managed as impact investment across the globe today. This is a third of the US$1.5 trillion required annually for achieving the Sustainable Development Goals (SDGs) by 2030 (CAPS, 2019. Business for Good).
Related resources by CAPS:
- Report: Business for Good: Maximizing the value of social enterprises in Asia (2019)
- Microsite: Business for Good
- Article: Asia’s embrace of social enterprises: governments lean in (Autumn 2017) Philanthropy Impact Magazine