Riskless Business: Decoupling Social Impact from Investing

Lauren Kaufmann, Legal Studies and Business Ethics, The Wharton School, and Michael Brown, Wharton Social Impact Initiative

Abstract: Impact investing operates on a template set by conventional investing, whereby financial metrics enable ongoing performance evaluation. According to this template, impact data should play an analogous role by allowing investors to gauge the social and environmental impact of their investments retrospectively. Yet impact evaluation is often far more difficult than financial evaluation because of measurement imprecision and causal indeterminacy. This study aims to understand how impact investors negotiate this paradox. The study uses a semi-structured interview strategy to examine how impact fund managers and impact advisors utilize impact data in investment strategy.