There has been substantial regulatory development around sustainable finance in recent years as the many segments of the industry have grown in size and maturity. Regulators around the world have introduced product labeling rules, taxonomies, anti-greenwashing standards and other regulatory and legal frameworks designed to support well-functioning, transparent and orderly markets. Yet many of these frameworks contain gaps around impact investing. In some cases, these frameworks do not explicitly recognize the industry as having distinct practices and utility.
Impact investing is an established segment of global finance, defined by its intentional focus on investing in solutions to real-world problems while also generating financial return. This approach enables investors to direct capital toward specific social and environmental outcomes of their choice in ways that are distinct from other types of strategies. Impact investments target systemic needs such as affordable housing, healthcare access, quality education, deploying nature-based solutions and financial inclusion. These investment strategies serve as a distinct tool in the investor toolbox.
These materials are intended to educate policymakers and regulatory authorities about the key characteristics that distinguish impact investing from other investment strategies. This document provides an overview of the Global Impact Investing Network’s (GIIN) observations on the industry based on its more than 15 years of research and investor engagement. The chapters describe the market’s scale and maturity; how intentionality supports real-world outcomes; how contribution from investors and investees can relate to positive outcomes; how strategies can measure, manage and verify their outcomes; and the range of return profiles that investors can choose to pursue from their impact investments.
Taken together, these characteristics offer a reference point for policymakers developing guidance in various forms on sustainable finance — helping to distinguish impact investing from other approaches that incorporate environmental or social considerations.
