You can choose which outcomes to focus on and where on the impact, risk, and return spectrum to deploy your capital.

Inspired by the SDGs and the just transition to Net Zero — or by specific local issues personal to you, your family and friends — the choice is yours. All you need is to know what outcomes you seek to achieve (or follow or support others in their declared impact goals).

If you have access to the privileged resource of available capital, then the responsibility is on you to ensure that you allocate it for positive impact. You can choose where and how to invest.

There are increasing numbers of investment portals and apps (e.g. Freetrade) that help you screen public market investments for gender equity, climate, inequality and other impact issues. Private investing, especially in early-stage, impact-led social enterprises can also be a good place to start.

The MakeMyMoneyMatter¹ campaign has highlighted that switching your pension to be greener is 21x more impactful on carbon emissions than changing your own personal energy, travel and food consumption behaviour.

At latest count JP Morgan has 50+ different impact strategies available to its private bank clients. Bluemark’s Making-the-Mark² report ranks the top impact-oriented private equity impact managers, namely Bain Capital Double Impact, Finance in Motion, LeapFrog, Nuveen PE Global Impact, Trill Impact. And there are thousands more managers and direct investment opportunities with social entrepreneurs and businesses queuing up for your engagement and investment.

Anyone screening out negative impact through ESG investing can achieve some impact, but a true impact investor, entrepreneur, or company aims to intentionally solve specific environmental or social issues, and measure their progress against those goals with open-source recognised standards. At the furthest end of the spectrum, before ‘capital-loss’ philanthropy, are investors who target concessionary returns to maximise impact outcomes, using innovative finance structures, often in partnership with development finance institutions on ‘blended finance’ investments.

But how can you be sure that these are true impact investors? It is increasingly useful to the fund manager to be branded as an ‘Impact Fund’ or to have an ‘Impact Strategy’, but definitions are wide and inconsistent. You have to watch out for ‘impact washing’, i.e. the misuse of the term ‘impact investing’ to attract capital without pursuing an actual impact intention. The threat of impact washing reinforces the need for definitional discussions and for required impact measurement and disclosures.

A recent SSRN study³ found that of 185 (so-called) impact funds that claim to achieve impact, only one third of the funds meet agreed impact standards. The share is equally low for funds classified under Article 9 of the EU’s SFDR, designed to help investors navigate the uncertainty of impact investment products. Only 64% of these ‘impact funds’ should really be classified as such.

But don’t be put off by the early market fragmentation, greenwashing inefficiencies, and the current attacks on ESG and impact investment (mostly from the political far right). The opportunities to invest for impact are here today and will be even greater tomorrow. With the help of GSG Impact and many other actors, the impact investment market is maturing. There is increasing transparency and integrity, and you can play a pivotal role in shaping impact investing simply by participating in it.

Good luck on your journey of optimising your capital for impact, risk, and return — the new ‘IRR’. Please do share your experiences and inspire others. Our world will thank you for your efforts.

¹ MakeMyMoneyMatter www.makemymoneymatter.co.uk

² Bluemark Tideline: https://bluemarktideline.com/making-the-mark-2022

³ SSRN Social Science Research Network: https://papers.ssrn.com/sol3/