What are the limitations of measuring impact?

Hilbert Investment Solutions' Zagamé (pictured) and Briant say assessments should examine the entire investment process

The buzz around impact investment is growing ever louder. The rationale behind it is undeniably compelling: drive positive, measurable change to help address some of the world’s biggest challenges while generating financial returns to boot.

Yet the reality of measuring impact is fraught with complexity, subjectivity and, in many cases, oversimplification, which risks undermining the essential change it aims to achieve.

So how can investors differentiate between impact ‘washing’ and investment strategies that are genuinely delivering sustainable real-world results?

Methods and standards for measuring financial returns have been established and refined over many decades. By contrast, we are only taking our first steps on the journey to assessing non-financial value and it demands a somewhat different mindset.

Read the full comment in ESG Clarity‘s July digital magazine here.

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Natasha Turner

Natasha is global deputy editor at ESG Clarity, part of the Bonhill Group, and has been a financial journalist for six years. She has been shortlisted for Story of the Year and Investment Journalist of...