Impact investing refers to investments "made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return".[1] At its core, impact investing is about an alignment of an investor's beliefs and values with the allocation of capital to address social and/or environmental issues.
Impact investors actively seek to place capital in businesses, nonprofits, and funds in industries such as renewable energy,[2] housing, healthcare, education, microfinance, and sustainable agriculture.[3] Institutional investors, notably North American and European development finance institutions, pension funds and endowments have played a leading role in the development of impact investing.[4] Under Pope Francis, the Catholic Church has seen an increased interest in impact investing.[5]
Impact investing occurs across asset classes; for example, private equity/venture capital, debt, and fixed income. Impact investments can be made in either emerging or developed markets, and depending on the goals of the investors, can "target a range of returns from below-market to above-market rates".[6]