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Where to start

Dive into the world of impact investing.
We are here to help you navigate your way
through what this world has to offer.

What is impact investing?

Impact investing is an investment strategy that goes beyond simply achieving financial gains. This investment approach is applicable to all asset classes, and achieving financial returns and realizing positive social and environmental impact go hand in hand.

We'd love to help you get started with impact investing. For some questions you can contact us directly; for others we will refer you to experts who can help you further.

Impact Investing 101

There is so much written about impact investing that it can sometimes be hard to see the forest for the trees. Here is a small collection of resources curated by PYM to get you started.

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Impact Investing: An Introduction

This guide (part of the Rockefeller Philanthropy Advisors’ Philanthropy Roadmap series) discusses the spectrum of impact, projections on the future of impact investing and why impact investing is important to realize much-needed transitions in our society.

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Core Characteristics of Impact Investing

How can you as an investor be sure that a certain investment does actually have a positive impact? The Global Impact Investing Network (GIIN) sets out the four core characteristics any impact investment should have.

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Sustainable Development Goals: Impact Theme Framework

The Sustainable Development Goals (SDGs) are a key driver to a more sustainable and fair world. What do the 17 SDGs actually entail and how can impact investors integrate these into their investment approaches? Impact investing network Toniic presents its SDG Impact Theme Framework.

Impact Investing Uncovered

A great first step

This 1.5-hour interactive webinar will introduce you to the basics of sustainable and impact investing and how they can be applied to your own impact journey.

We will discuss how to define impact and the different impact themes, how to have impact through all asset classes, and how the ecosystem works.

Above all, experienced impact investors will provide insight into their personal portfolios and share examples of how they started.

Meet the experts

After you've read up and joined our webinar, you're probably curious about the first-hand experiences of more impact investors. Those can be found in several places.

Even if you already have experience with impact investing, we are happy to help you continue your journey.
Feel free to contact us with specific questions, and we'd love to see you at one of our gatherings!

Upcoming PYM Events

Frequently Asked Guestions

What is impact investing?

What is impact investing?

Impact investing is an investment strategy that goes beyond simply achieving financial gains. In this investment approach, achieving financial returns and realizing positive social and environmental impact go hand in hand.

This is achieved by investing capital in companies, projects or funds that focus on addressing social and environmental issues.

The ultimate goal is to strike a balance between making a profit and bringing about positive change.

What is the impact investment spectrum?

The impact investment spectrum categorizes investments based on their financial returns and social/environmental impact. It ranges from those seeking market-rate returns with some positive impact to those prioritizing transformative impact with potentially lower or no financial returns. 

Watch this video to learn more

What are examples of impact investing?

Impact investments encompass a wide range of sectors and asset classes. Here are some common themes:

  • Renewable energy: Investments in solar, wind, hydroelectric and other renewable energy projects.
  • Microfinance: Investments in microfinance institutions or organizations that provide financial services to disadvantaged populations.
  • Regenerative agriculture: Investments in regenerative agriculture, forest agriculture, or initiatives to promote sustainable and ethical agricultural practices.
  • Healthcare: Investments in healthcare facilities, medical technology, or pharmaceutical companies aimed at improving access to quality healthcare.
  • Social enterprises: Investments in companies that prioritize social or environmental impact in addition to financial returns.
  • Sustainable infrastructure: Investments in sustainable transportation, water and sanitation systems, green buildings and smart cities.
  • Affordable housing: Investments in housing projects that provide affordable and accessible housing for low-income communities.
  • Education: Investments in education initiatives, including schools, vocational training programs, or educational technology platforms.
  • Water and sanitation: Investments in clean water systems, wastewater treatment facilities, and water conservation projects, especially in developing markets.
  • Impact funds: Investments in funds for impact investing in various sectors and themes.
Where do I go to make impact investments?

Depending on your current financial service providers, you could for example work with your bank, family office or financial advisor.

Of course, you can also find support from the PYM network by meeting with like-minded people, our ambassadors, who are willing to share their experiences. In addition, we offer online courses and webinars on impact investing.
Lastly, our Trusted Partners and our Network Partners can help you on your way to greater impact.

Our ambassadors

Our events

Our partners

Which products are available for impact investing?
  • Direct investments in social enterprises, for example in the form of equity, loans, convertible bonds, grants, donations and other financial instruments.
  • Impact funds, e.g. Private Equity, Venture Capital, Engagement Funds, Microfinance Funds, and Fund of Funds.

  • Crowdfunding in the form of shares, loans and donations.

  • Listed securities such as stocks and bonds, in the form of SRI funds, Exchange Traded Funds (ETFs) or managed portfolios.
    It remains a point of debate whether these investments can truly be called impact investments.

  • Green bonds are issued to finance projects that promote sustainability and contribute to environmental goals.

  • Social Impact Bonds (SIBs) are financial instruments that finance social programs based on the achievement of measurable results. Investors provide capital upfront and returns depend on the success of the program.

  • Philanthropy can support impact investing in the form of crowdfunding and direct donations, forgivable loans and specialized funds (such as the Donor Impact Investment Fund).

    These products vary widely in characteristics such as liquidity, time horizon, risk and diversification, impact potential, personal involvement and minimum investment size.
    Which product suits you best obviously depends on personal preferences and circumstances.
How do I start with impact investing?

There are a number of steps you can go through if you're just starting out in impact investing, and we're happy to help:

  1. Do research on what impact investing is: For example, take a PYM intro course.
  2. Find out what organizations are active in impact investing: For example, through PYM's partners.
  3. Meet other impact investors with a similar profile: We are happy to introduce you to our ambassadors.
  4. Determine your impact and financial goals: Join a PYM Impact Circle, for example.
  5. Get advice from professionals specialized in impact investing.
  6. Research and select investment options that fit your goals.
  7. Conduct due diligence on potential investments.
  8. Diversify your portfolio to manage risk.
  9. Measure the impact of your investments.
  10. Adjust your strategy over time based on your results and goals.
Why is impact investing important?

Impact investing is very important because it addresses the global challenges of our planet, aligns investments with values, drives innovation and market transformation, mobilises private capital to work alongside public capital to work on social and environmental goals, enhances stakeholder engagement, and shapes a sustainable economy.

Is there a trade-off between impact and return?

Not necessarily. If there is a healthy business model behind a social enterprise, the returns can be similar to conventional investments. Tech-for-good companies can be very scalable and become extremely successful in terms of impact and financial returns.

In some cases, philanthropy or concessionary investments may be the only way to achieve the desired impact. Social enterprises where a revenue model is not possible or still needs to be developed can benefit greatly from donations, grants, soft loans and patient capital. 

Expected financial returns cannot be seen separately from risk. For instance, an impact fund that invests in early-stage companies will have high return expectations, but the risk of several of the portfolio companies failing is considerable.

Are impact investments riskier than conventional investments?

Impact investments can be risky because of new and untested business models, markets, services and products. Many social enterprises are still small and early-stage, which is riskier for both impact and conventional investing. 

There are several factors that reduce the risk of impact investments: 

Social enterprises can often rely on a lot of goodwill from stakeholders, and have access to grants, concessionary capital and patient investors.
The founders and team members are motivated by impact and not only profits.
Social enterprises can benefit from the general trend to a more sustainable economy driven by new laws and regulations and consumer- and employee-awareness

How can I make the most impact?

Here are a few examples to increase the impact of your investments:

  • With direct investments, you can support the social enterprise with your knowledge, expertise, time and network.
  • Pay attention to the additionality of your investment, does it really make a difference when you make an investment?
  • Can your investment unlock other investments, for example, by being one of the first to invest, matching other investments, accepting more risk than others, or activating your network? This is also called catalytic investing.
  • You can share your experiences with impact investing with others and motivate them to get started themselves.
  • Invest in scalable solutions that have the potential to create systemic change.

Vocabulary

Additionality

Additionality is the concept of measuring the incremental effect of an investment compared to what would have happened without that investment.

To demonstrate additionality, impact investors evaluate the counterfactual scenario, which represents what would have happened without their investment.
They assess whether the desired impact would have been achieved by other means or by other stakeholders. If the investment produces results that otherwise would not have been achieved, it is considered additional.

The concept of additionality helps ensure that the positive change from impact investments is measured and visible.

Blended finance

Blended finance is the strategic use of different types of capital, including concessionary capital from public or philanthropic sources, alongside commercial investment, to address social or environmental challenges.

This involves combining grants, concessional loans, equity investments or guarantees, with private sector capital to achieve both financial returns and positive impact.

The concept of blended finance makes it attractive for commercial investors to make positive impact without compromising the returns they can achieve.

Committed capital

Committed capital is the total amount of capital that investors have committed to invest in a Private Equity fund, typically over the life of the fund, which can span several years.

However, investors do not provide the full committed amount upfront. Instead, they deposit capital as requested by the fund manager (Capital calls), based on the fund's investment opportunities and capital needs.

Concessionary capital

Concessionary capital is a term that refers to investments made to finance projects or ventures that achieve high impact but do not provide the returns that traditional investors look for.

Think of projects that solve complex social problems or projects in developing countries where realizing profits in the early stages is very challenging.

The idea behind concessionary capital is that it helps provide capital where it makes the greatest impact, even if it results in lower financial returns.

Socially Responsible Investing (SRI)

Socially Responsible Investing (SRI) is an investment approach that considers environmental, social and governance (ESG) factors in addition to financial returns.

This involves investing capital in companies and assets that adopt sustainable business practices, promote social responsibility and exhibit good governance. The goal is to achieve long-term financial performance while achieving sustainability and positive social impact.

Moreover, the idea behind SRI is that companies that perform well on ESG criteria will outperform those that do not in the long run.

Sustainable Development Goals (SDG's)

The Sustainable Development Goals are a set of 17 global goals adopted by the United Nations in 2015 to guide international efforts for a more sustainable and equitable future.

The SDGs are designed to address pressing social, economic and environmental problems and promote sustainable development worldwide.

The 17 Sustainable Development Goals are as follows:

  1. No poverty
  2. No hunger
  3. Good health and well-being
  4. Quality education
  5. Gender equality
  6. Clean water and sanitation
  7. Affordable and clean energy
  8. Decent work and economic growth
  9. Industry, innovation and infrastructure
  10. Reducing inequality
  11. Sustainable cities and communities
  12. Responsible consumption and production
  13. Climate action
  14. Living in the water
  15. Living on the land
  16. Peace, justice and strong public services
  17. Partnership to achieve goals

These goals cover a wide range of issues, from eliminating poverty and hunger to promoting gender equality, clean energy, sustainable cities, climate action and more.

The SDGs serve as a universal call to action, urging governments, businesses, civil society organizations and individuals to work together to achieve these goals by 2030.
Unfortunately, SDG 18 "No exploitation of animals" is missing from the official list, but there is a lot of attention within the impact community on this issue as well.

Read more about the SDG's

Engagement funds

Engagement funds are investment funds that are actively involved in the companies they invest in. They use their influence as shareholders to increase impact and align investments with long-term value creation

For example, if an engagement fund buys shares in a company that emits high levels of greenhouse gases, they engage with the company's management to try to convince them to make their operations more sustainable.

In this way, engagement funds not only achieve financial returns; they also contribute to positive change in the way these companies operate. Their investments are a means of influencing and contributing to a better world.

Environmental Social and Governance (ESG)

ESG stands for Environmental, Social and Governance (ESG). These are factors used to assess the sustainability and ethical performance of a company or investment.

  • Environmental: The impact of business activity on the natural environment. This can include issues such as greenhouse gas emissions, energy efficiency, water management and use of natural resources.
  • Social: The way a company treats people, both externally (society) and internally (employees). Consider labour law, diversity and inclusiveness, and human rights.
  • Governance: The way a company is governed. Consider business ethics, corruption, tax evasion, and board independence.
Greenwashing

Greenwashing is the practice whereby a company pretends to be environmentally friendly or sustainable when in reality it does not live up to those claims. The goal is to mislead consumers and investors.

Impact funds

Impact funds are investment vehicles that pool capital from multiple investors with the specific aim of generating positive social and environmental impacts in addition to financial returns.

These funds invest in companies, projects or organizations that meet predefined impact objectives. They offer individuals, institutions and other investors a way to collectively contribute to addressing pressing social and environmental issues while pursuing financial gains.

Impact funds can target specific impact themes, sectors or regions, allowing investors to focus their investments on areas close to their hearts.
Funds typically employ rigorous impact measurement and reporting methods to track and disclose the social and environmental outcomes of their investments.

Catalytic capital

Catalytic capital is used to unlock additional investment and address gaps in the market to promote social or environmental impacts.

An impact investment fund can use catalytic capital to invest in a high-risk project that may have a high positive social or environmental impact but carries greater risks financially. Catalytic capital allows the fund to demonstrate that the project has potential so that the project will attract other investors.

Examples of catalytic capital providers include:

  • Foundations: Foundations are an important source of catalytic capital because they are often willing to invest in early-stage or high-risk projects that may have a significant social or environmental impact.
  • Public development institutions: These institutions are usually funded by governments and are aimed at stimulating economic development and improving social conditions. They can provide catalytic capital in the form of grants, loans or equity investments.
  • Family offices and high-net-worth individuals: Family offices and high-net-worth individuals are increasingly investing in impact-oriented businesses and projects. They can provide catalytic capital in the form of direct investments or through impact investment funds.
  • Corporations and corporate foundations: Companies are increasingly investing in social impact projects directly or through their corporate foundations. They can provide catalytic capital in the form of grants, loans or equity investments.
Negative screening

Negative screening is an investment strategy that excludes certain listed companies or sectors from an investment portfolio based on specific ESG criteria.

For example, an investor may decide not to invest in companies involved in the production of weapons, or companies with poor human rights performance.

It is one of the oldest and simplest forms of SRI and allows investors to prevent their investments from being used for practices they consider unethical or harmful.

Positive screening

Positive screening is the process of selecting listed companies or investments based on specific positive ESG criteria or sustainability performance.

Unlike negative screening, which excludes certain companies or sectors, positive screening focuses on identifying companies that show leadership on ESG criteria.

The concept behind positive screening is that it not only helps manage risk but also contributes to positive impact by rewarding companies that perform well on sustainability.

Private equity impact funds

Private equity impact funds are investment vehicles that aim to generate both financial returns and a positive social or environmental impact. These funds invest in private, unlisted companies focused on addressing significant social or environmental issues.

Like engagement funds, private equity funds are also active with the companies they invest in. They work closely with management to ensure that company performance improves, as well as to measure and influence positive impact.

They raise capital through capital calls, where investors contribute committed capital. This is the commitment they make to invest a certain amount. Distributions are made when the fund sells the investments.

Social enterprises

A social enterprise is a company that combines business principles and entrepreneurship with social and/or environmental goals.

The goal of a social enterprise is not only to make a profit but also to bring about positive change in society.

Examples might include a café that provides employment opportunities for people with disabilities, or a company that provides affordable solar energy in developing countries.

Thematic investing

Thematic investing is an investment strategy that selects investments based on specific trends or themes that align with specific objectives. For example, the UN Sustainable Development Goals (SDGs), or social or environmental themes, such as clean energy, gender equality or water conservation.

Can't find the answer to your question?

Disclaimer

PYM does not provide professional and/or financial advice but intends to give you a taste of what is available in this field.
Do not take any unnecessary risk. 
Please do your research and consult the fund or company documentation before making any final investment decisions.
No rights may be derived from the information shared on this website or during PYM events. 
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