Introduction to Impact Investing & Social Finance

In the January 2011 edition of the Harvard Business Review, Mark Kramer and Michael Porter made a splash when they wrote an article entitled, “Creating Shared Value”. Kramer and Porter offer:

“…the principle of shared value involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center.”

Creating Shared Value was the first big leap by mainstream economists into the growing world of social finance and impact investing. An acknowledgement that for-profit companies could, and indeed, should transform the way they do business to ensure both financial and social success.

Impact investing and social finance refer to a sustainable approach for managing money that creates positive social and environmental outcomes as well as economic return through capital investments in traditional businesses, non-profits and social enterprises.