In search of gamma: An unconventional perspective on impact investing

In search of gamma: An unconventional perspective on impact investing

The notion that the success of an investment should be measured by financial return alone has always been contested and has been more hotly disputed in the wake of the financial crisis. Specifically, there is a growing belief in certain financial and political circles that investments should be judged by their ability to generate both a profit and a positive social impact. Clean technologies, such as solar electricity, are often held up as an example of how this new approach to investing – known as ´impact investing´ – can work. This paper summarizes the main findings from new research on impact investing supported by IESE Business School and the Family Office Circle Foundation, based on interviews with more than 60 dedicated impact investors. In it, we define impact investing, identify the diverse investors and how they have succeeded or failed and explain why the popular assumption that impact investing involves a trade-off between financial gain and social impact is wrong.