Impact investing: an explorative research on the current social measurement practices

Details

Supervisors

Yves De Rongé

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion

Abstract

This thesis found that the impact investing industry is marked by many challenges around social impact measurement. With a theoretical study and empirical interviews, it became clear that each financial institution has their own unique custom methodology to assess impact. Despite not making use of a standardized framework, methods do follow similar approaches for screening, sector exclusion, ESG integration, engagement, and best-in-class processes. When comparing different impact investments, it is as important to review the measurement methodologies, as it is to assess the impact results. As investment objectives differ, a positive social or environmental impact should be determined by evaluating both the final data and the used process behind it. Lastly, the commonly misunderstood tradeoff of financial performance is neglectable. Impact investing funds are achieving similar levels of financial return and are believed to be more future-proof than conventional, non-sustainable funds.