Social Impact What is actually a Social Impact Fund?

Have you ever wondered what a Social Impact Fund is? Are you already well-versed in this topic? Contact us, we would love to have a conversation. In this blog post, we will have a closer look at the concept of Social Impact Funds.

Social Impact Funds are investment vehicles that are specifically designed to generate positive social and environmental impacts alongside financial returns. They are gaining popularity as more and more investors seek to align their capital with their values and contribute to creating a more sustainable and equitable world.

Definition of Social Impact Funds:
Social Impact Funds are investment funds that focus on financing projects and companies that aim to address social and environmental challenges. Their main goal is to achieve measurable and positive societal impacts while generating financial returns for investors. These funds can invest in a variety of sectors, such as renewable energy, affordable housing, education, healthcare, and sustainable agriculture.

Assessment of Social Impact Funds:
Several important factors play a role in the assessment of Social Impact Funds.

  1. Impact Measurement Framework: Social Impact Funds use a robust framework to measure the impacts and quantify the social and environmental outcomes of their investments. This framework helps investors understand the actual impacts of their capital and compare the performance of different funds.
  2. Integration of Environmental, Social, and Governance (ESG) Factors: Environmental, social, and governance factors are integrated into the investment process of Social Impact Funds. They assess the sustainability practices, ethical standards, and social responsibility of the companies they invest in. The integration of ESG ensures that investments align with the goals of the fund.
  3. Thorough Due Diligence: Social Impact Funds conduct thorough due diligence to identify investments that have the potential to generate positive impacts. They assess the social, environmental, and financial risks associated with each investment opportunity and make informed decisions based on their impact goals.

Performance of Social Impact Funds:
Helen Chiappini, a renowned expert in impact investing, highlights some important insights that are relevant to the performance of Social Impact Funds:

  • Dual Objective: Social Impact Funds pursue both financial returns and social and environmental impacts. It is emphasized that the focus is on both objectives and that one should not come at the expense of the other.

  • Long-Term Value Creation: Social Impact Funds often take a long-term perspective on their investments, as sustainable social and environmental change takes time. Unlike traditional investment funds that often prioritize short-term gains, Social Impact Funds prioritize long-term value creation.

  • Diverse Investment Strategies: Social Impact Funds employ various investment strategies such as direct investments, venture capital, private equity, and debt financing. This diversity allows them to address different sectors and impact areas while managing risks and optimizing returns.

  • Positive Performance Track Record: Current studies indicate that Social Impact Funds can achieve competitive financial returns while generating significant positive social and environmental impacts. Investors are increasingly recognizing that investments for social impact do not necessarily sacrifice financial returns.

These insights, according to Chiappini, emphasize the effectiveness of Social Impact Funds in achieving both financial returns and positive social and environmental impacts. They show that the combination of financial goals and social responsibility can be successful in the investment world and play an important role in shaping a more sustainable future.
Social Impact Funds focus on social and environmental challenges Download

In Switzerland, there are several Social Impact Funds that focus on various social and environmental themes. Here are some examples:

  • BlueOrchard Impact Investment Management: BlueOrchard is a leading impact investment manager based in Zurich. They offer a variety of funds that invest in emerging markets and achieve social and environmental impacts. Their funds focus on microfinance, renewable energy, and sustainable agriculture, among others.

  • responsAbility Investments: responsAbility is a Zurich-based investment company specializing in development finance. They offer various funds that invest in emerging markets and address social and environmental challenges. Their investment focus includes financial institutions for microfinance, renewable energy, and agriculture.

  • Obviam: Obviam is an Impact Investment Manager based in Zurich that focuses on sustainable development in emerging markets. They manage funds that invest in companies that achieve positive social and environmental impacts. Their areas of focus include access to financial services, renewable energy, and agriculture.

Positive Impact with Social Impact Funds Download
There are other funds and investment companies that follow similar approaches and are committed to sustainable development and social change. Interested investors can explore these funds and their investment strategies to find the one that aligns best with their values and investment goals. You can inquire at your bank or conduct online research. 

We wish you a pleasant journey and successful investment in a Social Impact Fund. :)

More to read

Hello, we are the Valeriana team.

Subscribe to our newsletter now and learn regularly more about the following topics: integration, togetherness and social impact in our magazine. 😁