Amid all the excitement and hype around impact investment, I think few key questions are yet to be asked adequately. Here are my early thoughts:
- There are plenty of eloquent talks about the potential in creating both profit and social impact, and that impact investment as the future financing model to tackle social issues, but is there any solid evidence to show that it can happen on massive scale beyond early promises at this stage? Optimism based on anecdotes and theory is plenty, there's also a lack of in-depth practical discussion on coping with tension between profit and impact without relegating social impact to secondary concern.
- When it comes to impact assessment, the keyword stressed by impact investment advocates is feasibility to measure what are important in cost-effective manner. But how to avoid turning feasible approach into substandard assessment of impact? There are frequent talks that the development of impact assessment standard should include as many stakeholders as possible, but is it not mostly dictated by impact investors in practice?
- The biggest promotion right now is probably the market size forecast reportedly worth billions to attract more investors. Some call impact investment as the new asset class while others prefer to see it as the great breakthrough to our economic system and the world. How far are we from getting the fundamentals right? There's simply too much grand-scale promotion before laying the right foundation for systemic change. I find it pointless to over-promise before double/ triple-bottom line companies reaching significant scale in achieving social impact.
As of now, a great deal of effort is dedicated to building key infrastructure and support to appeal to more profit/ impact-driven investors, I think no lesser effort should be dedicated to protect the original goal of impact investment as innovative financing model to assist social enterprises in their social mission.
