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

Irene Bengo,Alice Borrello,Veronica Chiodo

doi:10.3390/su13052852

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.

Highlights

Promoting a cultural shift, adopting a coopetition approach, and integrating the social impact in the financial transaction—that emerged from the deductive qualitative analysis of the data
Financiers insisted that traditional investment principles are not appropriate for the Social impact investing (SII) approach because they are unable to capture the specific characteristics of the demand side
The lack of a proper theorization of the social impact investing concept has led to failure in translating the core SII principles into practice and the development of a distinctive SII

Summary

Introduction

Academic Editors: Olaf Weber and Helen Chiappini. Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. The boundary between social and business sectors has become increasingly blurred [1]

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Conclusion