Varieties of Social Impact Investing. A Philosophical View

Social impact investing (SII) has been a growing trend in finance for more than a decade. SII is defined as an investment aimed at “positive, measurable social and environmental impact” besides financial returns. In this paper, we point out that this measurability requirement can be problematic if the uncertainty is severe. We then provide a taxonomy of different types of impact investing based on a distinction between financial impact (FI) and social impact (SI) returns. Acknowledging the variety of impact investing can shed light on the practice of SII and indicate when forms of greenwashing or retrofitting are possible.