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Yes, impact investing does boost financial returns, but does more, according to the latest study confirming this finding, which also zeroed in on 10 "unique drivers" that "can enhance or add financial value" for investors. The new research study, The Alpha in Impact, comes from Tideline, an impact investing consulting firm, and Impact Capital Managers, a network of private funds that manage more than $8 billion focusing on impact investing.
"As many studies have demonstrated, impact investments can perform in line with — and sometimes better than — relevant benchmarks. But those studies are often silent on the role of impact in contributing to those returns," write Dave Kirkpatrick, managing director of SJF Ventures, and Brian Trelstad, partner of Bridges Fund Management, two of the ICM firms that worked with Tideline to generate the study using their own investment experience examples.
A key purpose of the study, the authors write, is to jump start the conversation beyond whether impact investing adds alpha to a fund, as the study shows it does. The10 drivers that enhance investment value are dived into three areas:
