The impact of Impact Investing The impact of Impact Investing The impact of Impact Investing

The impact of Impact Investing

Ida Kassa Johannesen

Head of ESG investments, Saxo Bank.

Impact Investing seeks to have a measurable and positive impact on the environment and society alongside financial returns. Impact investors are socially/environmentally motivated and want to do good while making money. It is the smallest segment of responsible investments with USD 1.16 trillion in AUM worldwide as of December 2021 according to the Global Impact Investing Network (GIIN). Impact Investing should not be confused with philanthropy, which only seeks social returns, not financial returns.

The spectrum of capital

Source: Adapted from Bridges Fund Management (2014), PRI (2013), RISS (2019), UK NAB (2017), Impact Management Project (IMP) (2018). Approach.png (2048×1152) (

Unlike other approaches of responsible investing, with Impact Investing, the impact must be intentional, measurable, and additional, which means that the impact would not have been achieved without the investment.

Historically, Impact Investing was associated with private equity, private debt investments (green and social bonds), and real assets such as infrastructure and real estate, and was reserved for high-net-worth individuals and institutional investors. Recently, the public market offering for retail investors has grown steadily from pure-play Impact Investing managers and larger, well-established firms. Specific themes include renewable energy, healthcare, sustainable agriculture, affordable housing and microfinance.

Why invest for impact

Every investment has the potential to impact society or the environment, either positively or negatively. While the choice of an investment is primarily driven by financial gains, it shouldn't come at the expense of people and the planet. An increasing number of investors embrace this idea, believing that investments should, in addition to offering financial returns, positively affect society and the environment.

With Impact Investing, for instance, one can aim to (i) reduce greenhouse gas emissions to combat climate change, (ii) halt or decelerate deforestation to counteract biodiversity loss, and (iii) diminish social inequalities to address associated poverty and violence. Impact Investing prioritises companies that make a positive difference and provide capital to tackle some of the world's most urgent challenges. This investment approach supports achieving several of the UN's 17 Sustainable Development Goals (SDGs), including climate action, clean water, gender equality, and education. The significance of Impact Investing is profound. A McKinsey study revealed that in India alone, impact investments benefit 60-80 million people, equivalent to the population of France.”

The myth of underperformance

The returns of Impact Investing strategies range between competitive market returns and below market return, depending on the type of investments, the sector, size, geography, time horizon and approach. According to a 2020 GIIN' survey, the majority of impact investors target competitive market returns. Only a minority of these investors are willing to accept below-market returns in exchange for a positive social and/or environmental impact.

Risks and other considerations

  1. Similar to any investment, with Impact Investing, there's market risk, the risk that the value of your assets decreases. Depending on the locations of the investee companies, you might also face political and emerging market risks, leading to reduced liquidity and a lack of financial, legal, and social stability.

  2. The growing demand and interest for Impact Investing has led to large inflows into impact strategies and this can contribute to inflated returns for some companies that contribute positively to society and the environment. There is therefore, a possibility that if the demand for Impact investing goes down, performance might be negatively affected.

  3. Impact Investing faces challenges related to impact measurement and impact washing, where companies or fund managers exaggerate the impact their products or services have on society and the environment. With no standards for measuring impact, another challenge is how to measure and report it.

  4. As impact strategies deliberately exclude certain sectors, such as fossil fuels and extractive utilities, there's often a sector bias compared to the broader market. This can lead to a significant tracking error between a fund and its benchmark.

  5. It is worth noting that Impact Investing is an active decision that requires some involvement from investors. Therefore, it's essential to make an effort, both before and after investing, to understand the impact of one's investment by reviewing companies and funds' disclosures and impact reports. Impact investors could enquire about the impact of their investments by for example asking, how many jobs were created, the amount of carbon saved, the number of meals served, or any other social/environmental priorities.

How to invest for impact

There are several investment products available including individual stocks, mutual funds, and ETFs. You can browse through Saxo’s Impact Investing theme for a list of stocks and funds that have a positive impact on society and the environment.

Before making any investments, you should consider your investment objectives, risk tolerance and time horizon and review the available information about the product on the platform. 

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.