ABSTRACT
This chapter analyses impact investing by regular financial institutions. It identifies three general conditions that should be met by an investment to be classified as an impact investment: the investment is channelled towards non-speculative activity; the activity contributes to the wellbeing of its consumers or users; and in the course of production and consumption, the activity underlying the investment has a neutral or positive effect on collective wellbeing. The chapter focuses on financial innovations that could enable us to create more impact through impact investing. It describes the potentially impactful investments that adhere to the three core conditions (non-speculative activity, contribution to wellbeing and contribution to common goods) but will not be financed by financial institutions because of inadequate financial returns. By combining private and public investment in an innovative way, private sector financing can play a role and potentially make the investment more impactful than if made solely through the government.
