Impact Investing

Within the social finance spectrum, impact investing is an approach of making targeted and measurable investments in projects and businesses within specific sectors to deliver social or environmental benefits.


While a standard definition of impact investing has not been adopted globally, the Global Impact Investment Network (GIIN) provides the most commonly used definition:

“Impact investments are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.”

The GIIN notes four core characteristics that distinguish impact investments from other social finance strategies:

  1. Intentionality – The stated intent of the investor is to generate social and/or environmental impact through investments. These investments are made into enterprises and funds that expand access to critical goods and services, and/or generate positive impact through their operations.
  2. Investment with return expectations – Impact investments are expected to generate a financial return on capital and, at a minimum, a return of capital.
  3. Range of return expectations and asset classes – Impact investments generate returns that range from below-market to risk-adjusted market rates. Impact investments can be made across all asset classes.
  4. Impact measurement – Impact investments have a commitment to measure and report the social and/or environmental performance and progress of underlying investments.


Impact Investment Market Activity and Trends

While interest in impact investing continues to accelerate, estimates of the global market size vary. An annual survey conducted by JP Morgan in 2015 showed that globally, impact investors managed USD 60 billion as of 2014, and were expected to commit an additional USD 12.2 billion to impact investments in 2015.[1] This growth has been largely driven by increased capital commitments from foundations, development finance institutions, impact investment funds, family offices and by governments that are using their capital to achieve a blended financial and social return. Many of the world’s largest financial institutions are engaged in or are actively exploring impact investing in a variety of ways, including through investing their own capital, or as stewards of capital from clients. Some mainstream financial institutions have provided customized strategies for high net worth individuals and families within private wealth management departments, and others are offering SRI products, and seeking to broaden their range of products to include options that integrate impact investing.


BOX 2.1: Global Impact Investment Trends

An annual survey conducted by JP Morgan and GIIN describes the trends for impact investors globally: In the latest survey, some notable trends included:

  • Housing accounts for a largest proportion of impact investments, followed by microfinance, financial services (excluding microfinance), and energy.
  • Just over half of total capital is invested through debt instruments, and a third is invested through private equity.
  • Over 90% of currently-managed capital is invested in companies in the post-venture stage, with 28% allocated towards companies at the Growth Stage, 52% in Mature, Private companies, 11% in Mature, Publicly-traded companies, and only 9% committed to Seed/Start-up companies or Venture Stage businesses.

– JP Morgan and GIIN: Eyes on the Horizon[2]


Canada’s impact investment market is anchored in a rich history of regional community economic development, notably in Québec. The Canadian impact investment market has been estimated to be between $2 billion[3] to $4 billion.[4] Market surveys have shown steady growth in impact investing using multiple indicators, including assets under management, investor interest and activity, product availability across asset classes, and demand for impact investment. Notable drivers of these trends include leadership from the private and community foundation sector, as well as activity among credit unions across the country.


Financial Institutions

Canadian chartered banks have engaged in impact investing in a relatively limited manner compared to their international counterparts. However, as awareness among clients and staff increase, Canadian banks are beginning to explore opportunities to engage impact investing, primarily through internal market research, staff education, and early strategy development. For many banks, however, this activity remains anchored within the corporate social responsibility departments, with limited activity within wealth management and product development teams.

BOX 2.2: Canadian Banks Engaged in Impact Investing

In 2012, RBC launched the Generator Fund, a $10m impact investment venture fund that was managed in-house to invest for-profit businesses tackling social or environmental challenges. RBC’s broader commitment extends to supporting social entrepreneurs and market building.

In 2012, TD commissioned a white paper that explored the impact investment landscape in North America. The report looks at the different impact investing products across asset classes and sectors.[5]

Some financial institutions that have not engaged in impact investing as investors have provided philanthropic grants to build the impact investing market through the sponsorship and development of knowledge products and events, often with established partner organizations. Providing financial resources for market research and education has allowed these organizations to develop a higher level of awareness and comfort with the sector and to begin to develop a brand presence that they can leverage for other parts of their respective organizations.

BOX: Global Financial Institutions and Impact Investing

JP Morgan’s Commitment to Impact Investment: JP Morgan has stated that it views impact investment as a business opportunity, and it has engaged in three ways: Investing its own capital in impact investment funds, which seek to improve the livelihoods of low-income and excluded populations; Building market-leading research as a public good, and; Using investment experience and research expertise to respond to demand from clients for impact investment solutions.

Morgan Stanley and the Investing for Impact Platform: In 2012, Morgan Stanley launched its Investing for Impact Platform, which offers consumers a range of strategies that helps them invest in a manner that is consistent with their values and beliefs.


Credit unions

Credit unions have played a significant role in the development of SRI. The State of the Nation report suggests that “impact investing is a natural fit for credit unions, whose principles of social responsibility, financial inclusion and community commitment are reflected in their missions, strategies and product offerings.”[6] The Responsible Investment Association (RIA) estimates that credit unions manage $698.2 million in impact investing assets, or 17% of the Canadian total.[7] Credit unions’ deposit assets and operational revenues are used to invest in a wide range of impact investment opportunities, including international microfinance programs, microloans for newcomers to Canada, finance for affordable housing initiatives and debt-financing for non-profit organizations and community projects that may not qualify for financing at other financial institutions.

BOX 2.3: Examples of Impact Investment at Credit Unions

Credit unions and caisses populaires across Canada are actively engaged in impact investment. Examples are highlighted below to demonstrate the deep history (e.g., Desjardins) and breadth (e.g., Vancity) of this commitment, as well as the role that credit unions are playing in supporting innovative impact investment models (e.g., Conexus Credit Union, Assiniboine Credit Union, Libro Credit Union, OMISTA Credit Union and Consolidated Credit Union and Affinity):

  • Desjardins’ caisses populaires provide community organizations, social enterprises with access to loans, equity financing, and variety of other financing products for development capital.
  • Vancity Credit Union tracks its commercial loan portfolio and investment portfolio for impact. It is estimated that approximately 44% of the credit union’s new loans are made to community impact businesses or sectors.[8]
  • Conexus Credit Union invests in Canada’s first Social Impact Bond: In 2014, Conexus Credit Union invested $500,000 in the first social impact bond (SIB) in Canada. The SIB finances a program for single mothers with young children and who are at risk of needing Child and Family Services, with affordable housing and support
  • Assiniboine Credit Union, Libro Credit Union, OMISTA Credit Union and Consolidated Credit Union have partnered with local community organizations in their area to help new Canadians gain recognition for their credentials obtained in their home countries. As of March 2015, these credit unions had made more than 330 government-backed loans to skilled new Canadians who require financing to pursue certification or training to work in their trades or professions in Canada.
  • Affinity Credit Union launched the Business for Good Social Venture Challenge, a crowdfunding competition between non-profit and charitable organizations. Members of the credit union voted via the crowdfunding platform for the social enterprise of their preference to receive the $50,000 prize money.


Retail Impact Investment

Retail investors are individuals who purchase investment products to achieve their personal financial objectives. Retail investors can be contrasted with institutional investors (e.g., pension funds) that make investment decisions on behalf of others based on a fiduciary relationship. Retail investors make investment decisions that primarily concern themselves and participate directly in the investment process creating a direct connection between their personal savings and the positive effects that these could have on their communities.

Retail investors can also be contrasted with individual accredited investors based on net worth and restrictions on the types of securities that they can invest in directly or through a broker. Accredited investors are assumed to have more sophisticated financial knowledge and ability to assess and take risk, presumably commensurate with the amount of assets that they own. While these restrictions are intended to protect retail investors, they also limit the types of opportunities that are available to them. In most cases, these restrictions mean that many impact investment products are unavailable to retail investors.

Retail impact investment has gained traction since the global financial crisis, which some attribute to the growing lack of lack of trust among retail investors in traditional financial products and institutions. But retail impact investment also has deeper roots. One of the earliest examples of retail impact investment is the Green Funds Scheme introduced in 1995 by the Dutch Government. The initiative provides a tax incentive to individuals that invest in funds that are managed by banks and that invest in environmentally sustainable projects. In 2001, the French Government introduced solidarity funds to corporate pension plan members, which allows individuals to invest up to 10% of their portfolio in impact opportunities.

Other established retail impact opportunities include Oikocredit and the Triodos Fair Share Fund. This guidebook profiles some retail products that have a long track record, such as the Calvert Foundation’s Community Investment Note, launched in 1995, and the Jubilee Fund’s Investment Certificate, launched in 2000. More recently, technological advancements have contributed to extending the range of social investment opportunities. For example, online peer lending platforms and microfinance initiatives – such as Kiva, which administers microfinance loans in developing countries through microfinance partner institutions – allow retail investors to access a range of local and international opportunities.

For the investment industry as a whole, the Triodos Report, “Impact Investing for Everyone”, suggests that retail impact investment has several benefits, including the following:
•    Retail impact investing increases diversity within the market allowing for a wider range of customized and local investment approaches to emerge;
•    Retail impact investing builds a more resilient investor culture, which means an investor is more practiced at understanding all aspects of an investment and better equipped to form judgments about individual financial and social interests; and
•    Retail impact investing can stimulate long-term thinking, which is beneficial to the broader financial market.

“Retail investing is much more directly participatory and meaningful than other forms of investment and ultimately recognizes a greater degree of humanity within investment relationships. For that reason, impact investments should evolve inclusively – ensuring that almost everyone has the possibility of interacting with entrepreneurial ideas and activities that benefit society and becomes a co-creator and participant in the most practical, direct way.”
– Triodos Report: Impact Investing for Everyone

Impact Investment Product Trends

Impact investment product availability continues to show steady growth globally in its targeted sectors, which include microfinance, affordable housing, renewable energy, and sustainable agriculture. As of early 2016, ImpactBase, a global database of impact investment funds, had over 380 active impact funds registered. Most of these funds were accessible only to institutional and accredited investors.  In 2014, a comprehensive market scan of the Canadian sector described almost 50 impact investment product opportunities; however, only a third of these were potentially accessible for retail investors.

Driven by demand from high net worth clients,  several mainstream financial institutions are currently developing custom strategies and providing access to impact investment products. These products can be made available through existing channels (e.g., advisors) or through new platforms, although to date there have been limited examples.
Retail impact investment products (for both retail and accredited investors) take many different forms and span across several asset classes. A list of retail impact investment products is provided in Appendix A.

BOX 2.5: Ethiquette
Ethiquette is an independent web platform developed and managed by the Responsible Consumption Observatory of UQÀM’s School of Management Sciences and Ellio. Launched in 2014, it is targeted at individual investors, and provides an interactive platform to explore all forms of responsible investment. In addition to reviewing responsible investment products and strategies, the site also provides guidance and insights for retail investors.


[1] Responsible Investment Association (2015). Trends Report. Retrieved from:

[2] Saltuk, Y., Ali El Idrissi, A. Bouri, A. Mudaliar, and Schiff, H (2015). Eyes on the Horizon: Impact Investment Survey. Rep. JP Morgan & The Global Impact Investment Network.

[3] Purpose Capital. (2014). State of the Nation: Impact Investing in Canada.

[4] Responsible Investment Association (2015). Trends Report.

[5] TD Bank Group. (2013). The Landscape for Social Impact Investing—A White Paper. Retrieved from

[6] Purpose Capital. (2014). State of the Nation: Impact Investing in Canada.

[7] Responsible Investment Association (2015). 2015 Canadian Responsible Investment Trends Report. Retrieved from:

[8] Vancity Credit Union Annual Report (2014)