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Impact investing : an emerging asset class

Gerritsen, Frank (2016) Impact investing : an emerging asset class.

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Abstract:Socially responsible investing is an investment strategy that not only seeks to attract a financial return, but also to bring about social change. However, recently impact investing emerged. This strategy also considers both aspects as in socially responsible investing, but uses a positive screen rather than a negative screen. The former results in a list of companies that do good, whereas the latter suffices by looking good, or minimize negative side effects. First, we discuss socially responsible investing and its current state. SRI differentiates itself from traditional investing by taking into account sustainability factors: environmental, social, governance. A social investor only invests in companies that have a sufficient sustainability score. SRI portfolios are found to be profitable. Subsequently, we define impact investing. Impact investing is an improvement over socially responsible investing. It is not about minimizing negative side effects, but to create positive side effects. The definition of impact investing comprises three elements: intentionality, nonfinancial measurement, and return. Afterwards, we build a measurement framework that allows to grasp impact. We propose to score all companies on general indicators to capture intentionality. Depending on its industry sector, companies will be scored on specific indicators to grasp impact in that industry sector.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:70 social sciences in general, 83 economics, 85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/71197
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