By Peter O'Flynn

PLEASE DO NOT SHARE THIS BLOG VIA TWITTER! – Read on to find out why. 

The rise and rise of impact investing

Investors are in search of a win-win. Since the mid-2000s, a new generation of investors and fund managers has emerged seeking social and environmental returns alongside financial returns. While often referred to as impact investing, you may have seen similar concepts around ‘mission-based investing’ and ‘double (and triple) bottom line investing’. The language can be confusing but impact investing, however you term it, is a growing trend spanning a variety of asset classes (including private equity, venture capital, real estate and fixed income). Asset owners, asset managers, service providers and a whole host of other industry players are involved in the impact investing market, and it is estimated that the size of the market will be as large as USD 500 million by 2020. This is in turn driving demand from investors and evaluators alike for greater understanding about this phenomenon.

Figure 1: Google Trends data on Impact Investing, demonstrating how often an Impact Investing is searched relative to the total search-volume over time

But what does impact investment really mean for society?

At the Centre for Development Impact (CDI), we are interested in ‘impact’… what it means, and how we might measure it. We can see great benefits that can arise from flows of private capital, but we also know there can be winners and losers. We are particularly interested in ‘development impact’ and what impact investing might mean for society, especially internationally and those that are poorest or least well-off. 

We have already collaborated with Wilton Park, an executive agency of the Foreign and Commonwealth Office, to raise this agenda through an international conference on ‘New Frontiers for Evaluation’. One of the major themes from the conference was to consider a new wave of ‘social impact evaluation’, plus there were many discussions on what exactly is ‘impact investing’, who are the key players, and whether there really is a demand to better measure social impact? There is so much yet to be discovered.

New Frontiers for Evaluation

A flavour of current thinking on the role of the private sector and impact investment in international development and the implications for evaluation

Mapping the market

Building on the vast body of existing knowledge we have gathered and our literature review on metrics and impact evaluation, we are now working on mapping players within the impact investing market to better understand the system and key drivers behind the demand for evidence of impact. This is a considerable challenge given that its boundaries are undefined, it is emerging market of indeterminate size, with thousands of players.

We are starting with ‘big data’. Twitter gives us one perspective on the network of different players, how they are connected, and who is important. We have begun research using Social Network analysis to look at how different relationships connect in this impact investing arena. We are presently capturing all tweets (some 5,000 thousand per week) around two key impact investing hashtags (#impactinvesting and #impinv). Then, by running keyword analysis on tweets we can see what important themes are discussed as well as analyse directional flows of information, central players and providers of information. 

Figure 2: Network of Tweets on the 11-12 May 2016. Each diamond is a twitter account, or ‘node’, and each line is an ‘edge’ connecting different members through tweets. Understanding now the network communicates will be a step forward in understanding the current impact investing market.  

Of course, we will underplay those actors that are less active on Twitter but who still might be influential within the system. It is particularly likely that organisations from the global south will be underrepresented and that there may be a self-selection bias as to the type of stakeholder in the impact investing market who uses Twitter. But this is only an initial foray into scoping the size of the emerging market. We then aim to use qualitative interviews and ego-network analysis to go further in-depth with key stakeholders (particularly from the global south), to understand better the system and key drivers for evidence of ‘social impact’.

We’ll share some emergent findings very soon. But while we’re collecting and analysing this data, we don’t want to change the conversations that are currently taking place on Twitter within the impact investing market. So that’s why we don’t want you to tweet about it! Although one or two little shares among friends probably wouldn’t hurt. 

Follow us @CDevIimpact. Blog by @Pete_OFlynn

Partner(s): Institute of Development Studies