Is impact investing becoming too fashionable for its own good?

Those pushing impact investing need to address at least three key questions if it is to grow its relevance and fulfil its supposedly transformative potential. In the first of a three-part series, Gorgi Krlev, whose research at the University of Heidelberg’s Centre for Social Investment focuses on social enterprise, innovation and impact, asks: is the current swell of mainstream interest in impact investing helpful or harmful?

I recently moderated a panel on the future of impact investing. When I raised the question of whether impact investing was merely a fashion, I put it to the room: only a few people (including two of three on the panel) raised their hands in agreement.

But given what we currently see, one might be inclined to agree with that minority. Impact investing is trendy right now. EVPA, co-curator of the Impact Papers series, last year celebrated its 15th birthday and held its annual gathering in The Hague, self-described as the ‘Impact City’. The event was opened by her Royal Highness Queen Maxima of the Netherlands; the preceding event that week, the ‘ImpactFest’, followed the motto #doinggoodanddoingbusiness.

Even the mainstream media talks about impact investing as a tool to save capitalism (see for example the Financial Times’ Special Report on Impact Investing). Estimated market size has been growing rapidly – and that growth is assumed to be a good thing in itself, even though we’re still far too uncertain on how to actually define impact investments.

One thing is clear: impact investing has ceased to be a minor thing. So why not call it a fashion? Because fashion carries the connotation of being a fad, something that isn’t meant to last, something that will go away.

If impact investing is to have the transformative effects it aims to have, it must enter the mainstream. People need to know about it

However, there is another way of looking at it: impact investing has become something desirable, something that people care for, and something that more and more people are aware of. Unusual tools – ones we don’t often see used to promote ‘social issues’, but perfectly ordinary in commercial marketing and pop culture – are being employed to push impact. One of the leading figures of the field, Jed Emerson, recently paired up with his niece, for example – The Hunger Games actress Jackie Emerson to produce “Impact – The Musical”. Yes, you read that right, musical.

One might be tempted to dismiss this as a bad joke, a move that will undermine the field, an example that proves impact investing is ‘just a fashion’ that will soon be replaced by the next big thing.

But the point is, if impact investing is to have the transformative effects it aims to have, it must enter the mainstream. People need to know about it. People need to be passionate about it and customers must demand it from their financial providers. Only then can it weather the storm of tougher economic times, which are likely to blow away the finance world’s new ‘social ambitions’ first.


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Media and public presence are also a tool to keep the phenomenon in check. Only when we have broad public awareness will impact investors be able to impose their standards on investing more generally. The subsequent potential of impact investing to transform finance at large could be considered one of its key levers to produce change.

Ideally investors do so for impact, not only with impact. But to make sure the tools of capitalism that got us into the mess, will even have a chance of getting us out of it, we require a redesign of the logics which govern financial markets, not a relatively small side-market that tries to combat the wildfire with drops of water. Impact investing institutions and those who are part of the ‘ecosystem’, as Ann Branch of the European Commission has argued, need to act as institutional entrepreneurs to really make a difference. Similarly, social intrapreneurs may turn big corporates into a force for good, as Yunus Social Business’ Daniel Nowack has argued; the fact that impact investing is a fashion can and should be used for that purpose.

The post was inspired by a panel discussion at the Social Innovation Summit 2019. I owe credit for impulses to the speakers and commentators of the event: Adrian Fuchs of FASE (panelist) on the positive sides of fashions, Jed Emerson on mainstreaming, and Karl H. Richter on the influence on traditional finance.

Let us know what you think by tweeting us and . Next week: Why does Europe seem to underperform in impact investing?