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Preserving the Integrity of Social Impact Investing: Towards a Distinctive Implementation Strategy

Author

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  • Irene Bengo

    (Department of Management, Economics and Industrial Engineering, Politecnico di Milano, 20133 Milano, Italy)

  • Alice Borrello

    (Department of Management, Economics and Industrial Engineering, Politecnico di Milano, 20133 Milano, Italy)

  • Veronica Chiodo

    (Department of Management, Economics and Industrial Engineering, Politecnico di Milano, 20133 Milano, Italy)

Abstract

Social impact investing (SII) is a strategy of asset allocation that aims to generate social and environmental impact alongside a financial return. Compared to other approaches of sustainable finance it holds an enormous potential of generating solutions to societal challenges. However, scholars have claimed that social impact often just employs logic upheld by the mainstream investment approach. Therefore, the paper investigates the assumption that SII has not developed a distinctive implementation strategy able to translate the prioritization of social impact into practice and how to overcome this issue. The thematic analysis of data collected through 105 interviews with Italian SII financiers and the top managers of social ventures allowed us to identify three features of an SII tailored practice: promoting a cultural shift of intermediaries, adopting a coopetition approach, and integrating the social impact in the terms of the financial transaction. Lastly, the paper drafts a research agenda to enhance the proper theorization of SII focusing on the definition of social risk, social return, and governance mechanisms. The key contribution of this article is confirming the lack of an SII-specific practice able to endogenize the intent of prioritizing social impact and providing suggestions to prevent the risk of impact washing.

Suggested Citation

  • Irene Bengo & Alice Borrello & Veronica Chiodo, 2021. "Preserving the Integrity of Social Impact Investing: Towards a Distinctive Implementation Strategy," Sustainability, MDPI, vol. 13(5), pages 1-19, March.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:5:p:2852-:d:511790
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    1. Shome, Samik & Hassan, M. Kabir & Verma, Sushma & Panigrahi, Tushar Ranjan, 2023. "Impact investment for sustainable development: A bibliometric analysis," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 770-800.
    2. Gimede Gigante & Emiliano Sironi & Caterina Tridenti, 2023. "At the Frontier of Sustainable Finance: Impact Investing and the Financial Tradeoff; Evidence from Private Portfolio Companies in the United Kingdom," Sustainability, MDPI, vol. 15(5), pages 1-21, February.
    3. Théophile Anquetin & Guillaume Coqueret & Bertrand Tavin & Lou Welgryn, 2022. "Scopes of carbon emissions and their impact on green portfolios," Post-Print hal-04144612, HAL.
    4. Irene Bengo & Leonardo Boni & Alessandro Sancino, 2022. "EU financial regulations and social impact measurement practices: A comprehensive framework on finance for sustainable development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 809-819, July.
    5. Tania Pereira Christopoulos & Pedro Verga Matos & Rafael Drumond Borges, 2024. "An Ecosystem for Social Entrepreneurship and Innovation: How the State Integrates Actors for Developing Impact Investing in Portugal," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 7968-7992, June.
    6. Annebeth Roor & Karen Maas, 2024. "Do impact investors live up to their promise? A systematic literature review on (im)proving investments' impacts," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3707-3732, May.
    7. Anquetin, Théophile & Coqueret, Guillaume & Tavin, Bertrand & Welgryn, Lou, 2022. "Scopes of carbon emissions and their impact on green portfolios," Economic Modelling, Elsevier, vol. 115(C).
    8. Berenike Wiener & Georg von Schnurbein, 2023. "Foundation Investment Funds for Grant-Making Foundations in Germany: Do They Facilitate Sustainable Investing?," SAGE Open, , vol. 13(4), pages 21582440231, December.
    9. Nachyła, Pola & Justo, Rachida, 2024. "How do impact investors leverage non-financial strategies to create value? An impact-oriented value framework," Journal of Business Venturing Insights, Elsevier, vol. 21(C).
    10. Dahbi, F. & Carrasco, I. & Petracci, B., 2024. "A systematic literature review on social impact bonds," Finance Research Letters, Elsevier, vol. 62(PA).
    11. Federica Bandini & Helen Chiappini & Francesca Pallara, 2022. "Fund managers acting as impact investors: Strategies, practices, and tensions," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 1084-1095, July.
    12. Leonardo Boni & Laura Toschi & Riccardo Fini, 2021. "Investors’ Aspirations toward Social Impact: A Portfolio-Based Analysis," Sustainability, MDPI, vol. 13(9), pages 1-20, May.

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