Giving Compass' Take:

• Jennifer Pryce, writing for Forbes, urges investors to turn to impact investing to solve more significant global challenges.  

• What makes impact investing different and (potentially) a more effective form of philanthropy?

• Read about the differences between impact investing and venture philanthropy. 

Elon Musk’s latest public missteps aside, how could a luxury eco car manufacturer be an impact investment?  I was not only skeptical, I was dismissive.  Our focus at Calvert Impact Capital was on poverty alleviation and I was accustomed to thinking of impact investing as an explicit, exclusive focus on investing in low-income communities.

But shortly after this panel, my thinking began to evolve. If we are going to make a dent in the large-scale global challenges we face – income inequality, access to quality basis services, climate change – we need to shift market attitude and behavior by focusing on scalable solutions.  We need to change the mindset focused on augmenting philanthropy to one that views sustainable business models as the way of the future, a large market opportunity that investors cannot ignore.

Impact investing is about understanding and incorporating social and environmental factors into investment decision making – not only because it is the right thing to do, but because it will be the determinant of long-term value creation.

Today, I can argue that Tesla is an impact investment. It still wouldn’t fit within our portfolio at Calvert Impact Capital, but I can make the case for its impact.  Not solely for the company’s dedication to zero-emission vehicles, but because they made creating electric cars their core business, not a side project or innovation lab aspiration.

The challenges that we are confronting are urgent and require big thinking. Time is not a luxury we have.  So reflect on your approach to impact investing.  Are you letting outputs you can measure drive your investment approach or are you thinking about the bigger picture?

Read the full article about impact investing by Jennifer Pryce at Forbes