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Measuring Impact
For advisers and investors alike, when it comes to measuring impact, the first question should be: what is actually going be to measured?
When considering the myriad of impact investment opportunities on offer, a clear, well-defined mandate for particular impacts is the first step towards having a result that can be measured.
The second question is: how to measure the impact?
And in short, the answer is that good data collection is a crucial way to measure impact.
Financial First Vs Impact First
Impact investors are seeking out a better way to invest by optimising the social and environmental outcome and impact of their investment while generating solid returns. It is important to note that impact can be subjective and may change depending on the client’s values, preferences, lifestyle, goals and objectives.
Financial first investors prioritise maximising the market investment returns supported by the social and environmental outcomes. Financial objectives are also subjective and may change depending on the client’s lifestyle, goals and personal objectives.
Financial Return Expectations
Impact investors have diverse financial return expectations, which often largely depend on whether they are “impact first” or “financial first” in their investment priority or a combination of both.
An impact investor may seek market-rate returns or market-beating returns, with the majority most likely to seek competitive market-rate returns.
According to the RIAA Responsible Investing & Benchmark Report published in September 2022, responsible investment products are outperforming the overall market in the multi-asset category on all timeframes, as well as the domestic equity category.
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