Giving Compass' Take:

• Ecosystem Marketplace highlights the efforts of IKEA in making sure their timber is sustainably harvested and offers lessons for other companies in the realm of socially responsible investments.

• From managing risk to using the Sustainable Development Goals as a touchstone, there are useful tips here for any private or public organization looking for impact. How many are we applying in our work?

• Here are more details on an enlightened approach to SDG-related impact investing.

Impact investors have funneled more than $100 billion into projects designed to make money by doing good, and $8 billion of that flowed into projects that improve the way we manage land.

Almost all of us have, at some point, assembled an IKEA shelf or sofa, but have you ever wondered where the company gets the wood for those things?

It’s a big question, because 30 percent of the world’s greenhouse gasses come from the way we manage our forests, farms, and fields; and IKEA has pledged that each of the 16 million metric tons of pulp and timber it uses each year will either be made of recycled material or certified as being sustainably harvested. More importantly, the company is well on its way to achieving that goal by its target date of 2020, as its entry on the Forest Trends Supply Change portal shows.

If all big companies did this, we’d be well on our way to fixing the climate mess — but they don’t, so we aren’t, raising the question: how is IKEA getting the job done?

Despite all these public benefits, the purchase isn’t part of IKEA’s well-known philanthropic efforts. Instead, it’s part of the company’s business plan: IKEA expects to make money from its forests, but it explicitly wants to “do well by doing going good,” and that makes this an “impact investment”.

We touched on a lot of subjects, but here are my key take-homes:

  1. They Expect Their Investors to Expect Market Returns
  2. Institutions Are Becoming More Receptive
  3. They Manage Risk by Knowing the Lay of the Land
  4. They Use the Sustainable Development Goals
  5. People are Motivated by More than Money
  6. It All Fits Together
  7. They See Impact Investing as More Permanent Than Pure Philanthropy

Impact investing, by its nature, rewards success over sexiness. If it works, it will be the donation that keeps on donating.

Read the full article about seven lessons from a decade of impact investing by Steve Zwick at Ecosystem Marketplace.