Impact Investing - An acceptable niche existence?

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Reference

Menichetti, M. J. (2019). Impact Investing - An acceptable niche existence? In New Challenges of Economic and Business Development 2019: Incentives for Sustainable Economic Growth, Conference Proceedings (pp. 575-586). Riga, Latvia.

Publication type

Paper in Conference Proceedings

Abstract

Sustainable and socially responsible investment (SRI) strategies face high growth rates worldwide. Although SRI strategies gained high amounts of assets under management over the last years, we do not recognize a significant shift towards sustainable business practices. The research aim of this paper is to give an answer to the question, why the high amount of assets managed sustainably does not lead to a significant transformation in business practices and how we could change the existing framework in order to achieve significant changes. Our methodological approach first leads us to a comparison of the existing seven sustainable investment strategies and a description of financial instruments, connected with those strategies. Second, we collect decision criteria and goals for supply side and demand side market participants. Finally, we use this preparatory work for the construction of a decision matrix, which allows us to interpret differences in goal fulfilments. This analysis delivers insights into the connection between sustainable investment strategies, preferences of supply side and demand side institutions, and the low speed of transformation. Up to now, no research on the connection between sustainable investment strategies and the speed of transformation towards sustainability has been done. Our results focus cost disadvantages of impact investing compared to other sustainable investment strategies. A stronger standardisation of impact investing’s private debt and private equity structures is needed. The legislator could favour impact investing to other investment strategies, as current law is based on less efficient investment strategies. A blockchain application could additionally drive down the costs and increase the flexibility of impact investing.

Persons

Organizational Units

  • Institute for Financial Services
  • Chair in Business Administration, Banking and Financial Management
  • Banking and Finance

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