Редакция журнала «Позитивные изменения»
Позитивные изменения. Том 3, № 2 (2023). Positive changes. Volume 3, Issue 2 (2023)
Impact Investing as an Object of Research. Digest of Publications for the First Half of 2023
Elizaveta Zakharova
The impact investing market is growing steadily around the world, but researchers point out that it is still in the process of structuring itself. This is due to the confusion in its definition. Impact investing is often equated with socially responsible investing or philanthropy. According to experts, building confidence in him requires establishing private-public partnership, which in turn will make it possible to create a real ecosystem and attract institutional players.
Elizaveta Zakharova
PhD student, Department of Social Sciences, National Research University Higher School of Economics
The scientific publications of the first half of 2023 mainly focus on sustainability in investing and the need for developing a comprehensive framework for the purpose. Since this subject is still in development, the authors still tend to resort to bibliometric and content analysis of the scholarly body of articles. In addition, the subject of sustainable impact investing is also treated through empirical research: for example, findings in one paper indicate that the willingness to pay for sustainable investment is determined primarily by emotional, rather than calculated impact assessment.
The researchers also focus on the social enterprise selection process by impact investors: they discover that social values and mission play a decisive role in the investment decision-making process today. Notably, one paper demonstrates that impact investing does not necessarily involve a financial trade-off, and emphasizes that there is a high probability of achieving both social impact and financial return through impact investing. In addition, we can see the focus of the impact investment market studies shifting from demand side to supply side: the authors are starting to analyze the cases of impact investment organizations in terms of their approaches to financing and fundraising. For example, one study shows the motives of financial return and social/environmental impact coexisting on equal terms along with extended planning timeframes and the engagement of non-financial support as essential characteristics of such enterprises.
Finally, impact investing market researchers keep applying a gender lens to their studies. A recent publication shows that women-owned private investment companies are more likely to pursue impact investing strategies. In this regard, it is suggested that more effort be put in encouraging and engaging women in entrepreneurship and impact investing.
These and other topics are covered in our regular digest of impact investing publications for the first half of 2023.
1. HOW DO IMPACT INVESTORS EVALUATE AN INVESTEE SOCIAL ENTERPRISE? A FRAMEWORK OF IMPACT INVESTING PROCESS
Anirudh Agrawal, Kristjan Jespersen
Article, January 2023
Journal of Entrepreneurship in Emerging Economies
Impact investors differ from venture capital firms as they invest to create social and commercial value. This paper pursues the question: how do impact investors select social enterprises? The aim of this study is to understand the selection and investing process of impact investors. This study developed a database of 115 impact-investing firms across different geographies. The significant findings presented in the paper are the following. First, this study shows the impact-investing selection process model. The four major steps in the selection process are context, investment focus, venture analysis and decision. In each step, social values and missions become the defining characteristics of the selection process. Second, the findings also discuss the typologies of impact investors as a function of their selection approaches. This paper discusses the impact investing strategy among social enterprises. It provides a framework for impact investing among investee social enterprises.
https://clck.ru/34RuMs
2. THE IMPACT AT STAKE: RISK AND RETURN IN PUBLICLY LISTED SOCIAL IMPACT FIRMS
Emanuela Giacomini, Nicoletta Marinelli, Luca Riccetti
Article, January 2023
Business Ethics, the Environment and Responsibility
This study investigates the risk and return characteristics of impact investing in the public equity market. We use a unique hand-collected dataset of 50 US listed firms whose product (or service) addresses at least one of the global social and environmental challenges, as defined by the United Nations Social Development Goals (SDGs). We designate such firms Impact Firms, and we compare their financial performance to a matched sample of Non-Impact Firms in the time span 2002–2019. Our results show that Impact and Non-Impact Firms have similar level of financial performance and both volatility and systemic risk over the entire sample period. At the same time, Impact Firms show a slightly lower negative skewness of the returns over the entire sample period, but not during crisis periods. However, compared to matched Non-Impact Firms, Impact Firms outperform during periods of market crisis, generating a valuable dampening of downside risk.
https://doi.org/10.1111/beer.12511
3. AT THE FRONTIER OF SUSTAINABLE FINANCE: IMPACT INVESTING AND THE FINANCIAL TRADEOFF; EVIDENCE FROM PRIVATE PORTFOLIO COMPANIES IN THE UNITED KINGDOM
G. Gigante, E. Sironi, Caterina Tridenti
Article, February 2023
Sustainability
Drawing from the extremely novel impact investing landscape and the limited existing literature on the topic, it appears that investing in social enterprises should come at the cost of partially sacrificing financial returns to invested capital. This paper investigates the existence of this tradeoff by assessing how the performance of impact investing funds compares to that of traditional private equity and venture capital operators. Focusing on portfolio firm operating performance, we construct a dataset of 85 impact-investing observations and 5,310 traditional observations over the period ranging from 2009 to 2020, in order to compare the performance of the traditional investor-backed firms with those of sustainable companies participated by social impact investors. Advanced matching methods such as Radius and Kernel matching suggest that the composition of the shareholding structure significantly affects the profitability of the company, with traditional firms outperforming their socially-concerned counterparts. Looking instead within the subsample of impact investor portfolio companies, and focusing only on the post-investment observations, we analyze how the percentage owned by the impact investors impacts the performance of the owned companies. The results show that, similarly to traditional ownership, a greater share controlled by impact investors leads to higher returns.
https://doi.org/10.3390/su15053956
4. IMPACT INVESTMENT ASSESSMENT METHODOLOGY FOR EARLY-STAGE START-UP INVESTMENT SCREENING
Axel Dwi Julianto, Sudrajati Ratnaningtyas
Article, January 2023
International Journal of Current Science Research and Review
Over the next five years, Indonesia is expected to absorb an estimated USD 23 billion in impact investments which could be materialized in the form of a Public-Private Partnership (PPP), and one of the beneficiaries of foreign investment is a start-up company. One of the steps for investing in impact investment is screening and scoring the ESG and SDG Alignment using standardized and tested methods created by accredited international institutions. Start-ups that are still in the early-stage phase are rather very difficult to be assessed using the currently available global standard methodology, therefore making early-stage start-ups out of reach for Impact Investment and early-stage start-ups have a high potential in multiplying their valuation to drastically increase venture capital profits, creating an assessment tool that is necessary to eliminate the lost opportunity. The objective of this research is to create an Impact Investment assessment tool based on ISS ESG impact rating and MSCI ESG SDG alignment assessment methodology that will be adjusted for Indonesian early-stage screening purposes and to be implemented in Venture capital preliminary in the business process.
https://clck.ru/34RuAR
5. IMPACT INVESTING AS A REGIONAL INNOVATION POLICY TOOL IN THE SOCIAL SPHERE
A. Yu. Kosobokov, O. S. Nadezhina
Article, January 2023
Economic Sciences
This article considers the features of investment activity in the social sphere. In particular, the authors consider the possibilities of using impact investing as a regional innovation policy tool in the social sphere. The work highlights the effects and opportunities created for the players implementing the impact investing mechanism, as well as the potential multiplier effects.
https://doi.org/10.14451/1.218.481
6. IMPACT INVESTMENT FOR SUSTAINABLE DEVELOPMENT: A BIBLIOMETRIC ANALYSIS
Samik Shome, M. Kabir Hassan, Sushma Verma, Tushar Ranjan Panigrahi
Article, March 2023
International Review of Economics & Finance
Impact investment has tremendous potential to contribute towards sustainable development. The growing significance and gradual development of the field warranted an investigation into its research trends. This paper provides a deep insight into the field of impact investment with reference to sustainable development using bibliometric analysis and content analysis. This is done by evaluating 147 relevant documents identified from the Scopus database following PRISMA protocol. VOSviewer and Biblioshiny were used for analyzing the data and visualizing the results. The study is holistic and explores the diversity of the existing researches pertaining to the study area on the basis of several parameters. This study identifies prolific authors, documents, sources, institutions and countries along with impactful keywords. The study provides significant insights about the prior research conducted in the field by identifying eight research clusters. It also provides valuable information about the research themes. Research results are expected to provide detailed insights about the research landscape of this particular field and also new direction for further research in this growing field.
https://clck.ru/34Ruga
7. INVESTING IN RUSSIA’S SOCIAL IMPACT PROJECTS: VALIDATING THE CRITERIA FOR TARGET MARKET
Yu. Razumova, Nina G. Ivelskaya, V. Andreev
Article, February 2023
Regional Economics: Theory and Practice
Subject. This article deals with the issues of investment policy and formation of the social services market in Russia.
Objectives. The article aims to analyze the relationship between demographic indicators and features of the economic development of Russia.
Methods. For the study, we used general scientific research methods.
Results. The article finds that the decrease in the fertility rate, the increase in mortality, and the increase in migration outflow are due to negative processes in the Russian economy.
Conclusions. Each particular instrument of public policy (impact factor) should be focused on solving a specific problem. It is necessary to take into account the peculiarities of the regions of Russia, as well as the interests of various social groups.
https://clck.ru/34RueS
8. IMPACT INVESTMENT DEAL FLOW AND SUSTAINABLE DEVELOPMENT GOALS (SDGS): ‘MIND THE GAP?’
Syrus M. Islam, A. Rahman
Article, February 2023
SSRN Electronic Journal
We examine the linkage between the available impact investment deals and Sustainable Development Goals (SDGs) to ascertain to what extent those deals are likely to achieve the aims of the SDGs, that of a sustainable and prosperous world. Drawing on 292 available deals, we find that most deals are directly or indirectly linked to only four of the 17 SDGs and are concentrated in two regions of the world. Accordingly, we conclude that impact investing has a significant imbalance in the SDG-dealflow-region nexus. Without addressing such an imbalance, impact investing will only have a limited impact on overall SDG attainment. Therefore, we also share some thoughts on addressing the imbalance.
https://clck.ru/34RuRK
9. IMPACT INVESTING IN GHANA: A MULTIPLE-CASE STUDY
D. B. Osei, I. Alagidede, Sena Agbodjah
Article, January 2023
Journal of Social Entrepreneurship
Contrary to extant studies on impact investing, which provide understanding from a demand-side perspective, this study changes this perspective by exploring the approach to impact investing from a supply-side viewpoint. Using a multiple-case study design and qualitative data from two Ghanaian impact investment organizations, significant strides are made to the limited but growing impact investment literature by providing in-depth descriptive account based on three dimensions: (i) funding approach, (ii) engagement approach, and (iii) exiting approach. Our findings provide evidence of an impact investment approach characterized by the concurrent motive of financial and social/environmental returns, longer time horizon, and engagement or provision of non-financial support. We conclude that this approach leverages the tools of venture capital to realize social or ecological purposes. The findings can potentially assist investors and entrepreneurs to make informed decisions to navigate the complexity surrounding the emerging impact investment environment in Ghana and economies of similar nature. Additionally, it will aid in developing explicit policies to regulate the sector, increase its awareness, and widens its appeal and use to serve the intended purpose of addressing social and environmental problems.
https://clck.ru/34RuQ7
10. DOES GENDER INFLUENCE THE INVESTMENT STRATEGY OF PRIVATE EQUITY FIRMS? EVIDENCE FROM IMPACT INVESTING
T. Cojoianu, Pia Helbing, A. Hoepner, Xi Hu, Beiyun Xiao
Article, April 2023
SSRN Electronic Journal
We face a finance gap in both, female and impact investing. This paper examines gender influences on impact investment strategy of private equity. Using a comprehensive dataset on all PE deals from 2010–2021, we uncover new evidence that female ownership of PE firms significantly increases the probability of impact investment strategy. We have examined this from three different angles: the PE investor level, the investor-deal level, and the syndicatedeal level. We find pronounced differences of this relationship between Common (positive) and Civil (negative) Law countries, and between early (insignificant) and late (significantly positive) investment stages. Our findings remain stable across multiple robustness tests.
https://clck.ru/34Rumx
11. IMPACT INVESTING IN ACTION: A FRAMEWORK FOR SUSTAINABILITY
S. Sushanth Kumar, Varun Chotia, Swati Soni, Vinay Khandelwal
Article, May 2023
International Journal of Management and Sustainability
The Sustainable Development Goals (SDGs) are a set of goals designed to be a “blueprint to achieve a better and more sustainable future for all.” Despite being meticulous about achieving the SDGs, India’s overall SDG score is 61.9 out of 100. While multiple models and frameworks have been developed, a new concept that has gained currency is impact investing. Content analysis of academic journal articles was employed to analyze the terminology, definition, and similarities and differences in the use of the term impact investing. Impact investing helps to benefit society and the environment without the need to sacrifice financial returns. It attempts to address the global challenges of access to energy, potable water, basic hygiene, nutrition, health, and education by exploring innovative commercial solutions. The degree of sustainability achieved through impact investing depends upon the efficiency of the multidisciplinary team formed to conduct the due diligence to achieve the social and financial goals by paying equal attention to risk, value addition, impact, and investor expectations. This study builds a case for India, suggesting the execution strategy of impact investing as an answer to India’s sustainability conundrum.
https://clck.ru/34RuoU
12. ACCOUNTING INFRASTRUCTURES AND THE NEGOTIATION OF SOCIAL AND ECONOMIC RETURNS UNDER FINANCIALIZATION: THE CASE OF IMPACT INVESTING
Andrei Guter-Sandu
Article, January 2023
Competition & Change
Impact investing has emerged as a topical subject-matter for scholars working at the intersection between finance and social policy. By and large, it is seen as a product of financialization: some argue that the social is colonized by financial actors and methods, others see it as a site where boundary work produces a state of value plurality in which competing values – social and financial – co-exist. This article takes the latter perspective further and unpacks the endogenous dynamics underpinning the creation of social values in impact investing programs. It analyzes how high-level organizations in the field prescribed specific social impact valuation processes and mechanisms for collecting, measuring, and reporting data about value creation. It argues that the social values circulating in the impact investing field emerge from the interplay between a wide array of stakeholders, impact investors included. The social impact accounting tools that capture them materialize therefore as sites of political battles and negotiations between stakeholders, with both emancipatory but also exploitative potential. This has consequences upon our understanding of how financialization travels and how the social dynamics underpinning accounting devices (re) draw boundaries between competing values and fields.
https://clck.ru/34RuG6
13. IMPACT INVESTING: PASSING TREND OR NEW ALTERNATIVE TO TRADITIONAL INVESTMENT?
Albine Ake-Bucher, Sherilyn K.
Article, February 2023
SSRN Electronic Journal
Impact investing has gradually developed in response to a collective awareness generated by the economic and social changes that marked the 20th century. The market still struggles to structure itself, partly due to the confusion surrounding its definition. Impact investing is still too often equated with socially responsible finance or even philanthropy in some cases.
Growth opportunities are particularly numerous in developed countries, whose market has so far been neglected in favor of developing countries. The European market, in particular, holds untapped opportunities and should take off in the coming years, following the example of the North American market. France has already taken some first steps in this direction, particularly by modifying standards related to employee savings to create a favorable framework for the development of impact investing. Furthermore, some major European players are mobilizing to try to create an ecosystem. This is the case for Nestlé, Vodafone, and Novartis, who are collaborating on projects in Kenya with the aim of creating a favorable economic environment for investment. However, the creation of a true ecosystem will require the development of large-scale partnerships between the public and private sectors. Such collaboration would bring more credibility to the impact investing sector and attract institutional actors still very much in the background, such as large investment banks.
https://clck.ru/34Rud6
14. THE IMPORTANCE OF GOALS-BASED (AND VALUES-BASED) LIABILITY INDICES: APPLIED TO IMPACT AND GREEN INVESTING
A. Muralidhar, Roland van den Brink, P. Groenendijk, Ronald van der Wouden
Article, March 2023
SSRN Electronic Journal
Investors are creating portfolios that align with their specific goals and values. We posit that goals and values should be translated into Goals-based Liability Indices (“GLIdes”). GLIdes can be used to achieve goals, benchmark the asset portfolio, and improve governance. They allow Boards to measure progress to their overall (or multiple) goal(s) and also the relative risks of their investment policies and implementation. We first introduce the GLIdes concept as an extension of the Investible Liability Index developed in the early 2000s. The paper also shows how GLIdes can be applied broadly, and specifically to goals such as “green” investing or impact/sustainable investing. For some goals/values, GLIdes can be created using existing instruments. For others, new instruments will need to be created much like Retirement Security Bonds were created to be the relative safe asset for retirement investing. The paper shows how investors might set a clear path to achieve dynamic, long-term goals (e.g., Net Zero compliance), through clear GLIde paths, offering a transparent and auditable process.
https://clck.ru/34Ruid
15. ACHIEVING FINANCIAL SUCCESS BY PURSUING ENVIRONMENTAL AND SOCIAL GOALS: A COMPREHENSIVE LITERATURE REVIEW AND RESEARCH AGENDA FOR SUSTAINABLE INVESTMENT
Mahyar Amini, Ali Rahmani
Article, April 2023
World Information Technology and Engineering Journal
This paper conducts a systematic review of the research work in the field of sustainable investment for identifying research gaps and laying down research agenda for the future. Articles on sustainable investment published in journals indexed at the Web of Science during 1989 and 2018 (so far) are reviewed for the purpose of this research. A total of 225 papers were found through the search criteria, out of which 213 papers were selected for review. The paper identifies gaps in the literature that can be considered as opportunities for future study. The analysis of these articles led us to note the need for an agenda that can present a holistic framework of sustainable investment with lesser variations and increased acceptability. The research agenda proposed by the paper may help researchers in framing their research problems around the gaps identified. Sustainable investment is a potential solution to social and ecological issues by transforming the financial markets to have more accountability for their impacts. Therefore, it is important to carry out extensive research in this field so as to develop it as an applied field of investment. There has so far been no attempt to perform a systematic review in the field of sustainable investment for a period of 20 years, as has been made in this paper.
https://clck.ru/34Rukj
