Impact Investing

Impact investors seek to make a difference through their investments, such as providing affordable housing, expanding renewable energy, improving healthcare access or supporting small businesses in underserved communities.

Two features distinguish impact investing from broader approaches. First, the intention to create positive impact is central, not a side effect. Second, impact is measured and reported, using specific indicators such as homes built, emissions avoided or people served.

For example, an impact fund might lend to small businesses in low-income areas, aiming to earn a modest return while tracking jobs created and incomes improved.

Expected financial returns vary. Some impact investors seek market-rate returns, while others accept lower returns to achieve greater impact. Impact investing is common in private markets, such as private equity, private debt and venture capital, but also includes certain bonds, such as green and social bonds. Measuring and verifying impact consistently remains a challenge.