Impact investing has great potential to address social problems by tapping into investors’ enthus... more Impact investing has great potential to address social problems by tapping into investors’ enthusiasm for underpinning activities that ‘make a difference to society’. Measurement of social benefits can therefore influence investor choices as perceptions of non-financial returns vary. To understand such choices, financial returns, social and environmental returns (SER) and SER measurement should all be taken into account. There has, however, been little consideration of these aspects in an integrated way. To advance the debate, this paper explores a basic model which extends a standard utility function to SER and draws on insights from theories of knowledge. Indicative results when plausible parameters from research and historical trends are put in indicate (i) a tightness of resources for measurement; (ii) investors becoming less willing to accept lower financial returns when they are less confident about social returns; and (iii) an increased lack of willingness to accept lower financial returns where SER returns relate to intangibles that are harder to measure.
Impact investing is a form of investment that has risen to prominence in recent years. Compared t... more Impact investing is a form of investment that has risen to prominence in recent years. Compared to other forms of socially responsible investment, the most prominent feature of impact investing is a focus on measuring the social and environmental return that it generates. In response, much effort has been undertaken to develop effective measurement systems, but significant confusion remains around the notions of 'non-financial return' and 'impact', and their assessment in practice.
Impact investing has great potential to address social problems by tapping into investors’ enthus... more Impact investing has great potential to address social problems by tapping into investors’ enthusiasm for underpinning activities that ‘make a difference to society’. Measurement of social benefits can therefore influence investor choices as perceptions of non-financial returns vary. To understand such choices, financial returns, social and environmental returns (SER) and SER measurement should all be taken into account. There has, however, been little consideration of these aspects in an integrated way. To advance the debate, this paper explores a basic model which extends a standard utility function to SER and draws on insights from theories of knowledge. Indicative results when plausible parameters from research and historical trends are put in indicate (i) a tightness of resources for measurement; (ii) investors becoming less willing to accept lower financial returns when they are less confident about social returns; and (iii) an increased lack of willingness to accept lower financial returns where SER returns relate to intangibles that are harder to measure.
Impact investing is a form of investment that has risen to prominence in recent years. Compared t... more Impact investing is a form of investment that has risen to prominence in recent years. Compared to other forms of socially responsible investment, the most prominent feature of impact investing is a focus on measuring the social and environmental return that it generates. In response, much effort has been undertaken to develop effective measurement systems, but significant confusion remains around the notions of 'non-financial return' and 'impact', and their assessment in practice.
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Papers by Neil Reeder