Impact investing refers to investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return. Impact investing is about an alignment of an investors beliefs and values with the allocation of capital to address social and/or environmental issues.
Businesses and nonprofits that impact investors generally seek to place capital in include renewable energy, housing, healthcare, education, microfinance, and sustainable agriculture. Institutional investors, notably North American and European development finance institutions, pension funds and endowments have played a leading role in the development of impact investing.
Impact investing occurs across asset classes. Impact investments can be made in either emerging or developed markets, and many different approaches have given a range of returns from below-market to above-market rates.