Opening the Market for Impact Investments: The Need for Adapted Portfolio Tools

Lehner, O.M. and Brandstetter, E., 2015, Opening the Market for Impact Investments: The Need for Adapted Portfolio Tools, Entrepreneurship Research Journal (ISSN: 2157-5665), 5 (2), 87–107

21 Pages Posted: 15 Dec 2018

See all articles by Lisa Brandstetter

Lisa Brandstetter

Upper Austria - University of Applied Sciences Upper Austria

Othmar Manfred Lehner

Hanken School of Economics - Department of Accounting; University of Applied Sciences Upper Austria; Middlesex University of London

Date Written: August 28, 2015

Abstract

Social and environmental impact investing as an activity as well as a concept has grown in recognition on a truly global scale. Yet, apart from anecdotal success stories of some specialized forms such as social-impact bonds, little is known about the field and the complex interplay between agents, instruments and regulations. Neither the rationales of the various participants in the field, nor the evaluation criteria for some of its instruments have been scrutinized in-depth so far. Especially the important constructs of risk and returns from a financial as well as a social impact perspective have so far been used in differing fashions, thus rendering the applied logic constructs incompatible to each other. Compatibility, however, is a pre-requisite for the inclusion of impact investments into the portfolios of traditional institutional investors. Much can be gained from this, not only would a huge inflow of capital improve the social and environmental sector, but early evidence shows that the overall performance of mixed portfolios might profit because the experienced low correlation of impact investments to traditional markets reduces portfolio risk and increases sustainability. In addition, more and more investors demand ESG (environmental, social and governance) criteria to be considered when it comes to building portfolios because of the great opportunities provided.

Keywords: impact investing, social entrepreneurship, social finance, sustainable finance, portfolio management

JEL Classification: M13, M15

Suggested Citation

Brandstetter, Lisa and Lehner, Othmar Manfred, Opening the Market for Impact Investments: The Need for Adapted Portfolio Tools (August 28, 2015). Lehner, O.M. and Brandstetter, E., 2015, Opening the Market for Impact Investments: The Need for Adapted Portfolio Tools, Entrepreneurship Research Journal (ISSN: 2157-5665), 5 (2), 87–107, Available at SSRN: https://ssrn.com/abstract=3286644

Lisa Brandstetter

Upper Austria - University of Applied Sciences Upper Austria ( email )

Franz-Fritsch-Strasse 11
Wels, A-4600
Austria

Othmar Manfred Lehner (Contact Author)

Hanken School of Economics - Department of Accounting ( email )

FI-00101 Helsinki
Finland

University of Applied Sciences Upper Austria ( email )

Wehrgrabengasse 1-3
Steyr, Upper Austria 4400
Austria

Middlesex University of London ( email )

The Burroughs
London, NW4 4BT
United Kingdom

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