Social Impact Investments

Impact investing – investments seeking to generate positive social and/or environmental impact alongside financial returns – has gained increasing attention in recent years. On the one hand, proponents praise its potential to mobilize private capital at an unprecedented scale to address poverty and climate change, fostering hopes to bridge the funding gap of the Sustainable Development Goals. On the other hand, critics question the capacity of impact investments to deliver on their dual promise, pointing at a lack of empirical evidence that fuels “impact-washing” – the exaggeration or misrepresentation of their social impact.

We study social impact investments channeled to low- and middle-income countries (LMICs), where empirical evidence is especially scarce. Our investigations cover most of the value chain of impact investments, from the behavioral motivations of capital providers to their subsequent allocations and associated social outcomes. We notably examine several threats to the effectiveness of impact investments in fulfilling their intended purpose to shed light on their actual contribution. Actively supported by the external page elea Foundation for Ethics in Globalization, a pioneer in philanthropic impact investing, our research ultimately aims to provide actionable evidence for practitioners in the industry.