From Ideas to Practice, Pilots to Strategy Practical Solutions and Actionable Insights on How to Do Impact Investing

From Ideas to Practice, Pilots to Strategy Practical Solutions and Actionable Insights on How to Do Impact Investing

1. Preface

From Ideas to Practice, Pilots to Strategy is both an attempt 
– and an opportunity – to disseminate the best practices 
and lessons learned from the first movers, early adopters 
and bold innovators in the field of impact investing, with the 
goal of further advancing the sector.
When we published From the Margins to the Mainstream: 
Assessment of the Impact Investment Sector and 
Opportunities to Engage Mainstream Investors in September 
2013, we sought to add clarity to the field through a realistic, 
current assessment. With over 10,000 people accessing 
the report in the first two weeks, it became evident that we 
touched on a strong need. However, given the relatively 
small scale of impact investing, we realized that more than 
clarification was needed. For active investors in the field, 
to shift impact investing from a small part of their portfolios 
to a full-fledged strategy requires operational and practical 
knowledge. New players in the impact investing space, 
looking to take it from a compelling idea to a real investment 
approach, need to know how to get started in this nascent 
and potentially rewarding sector. This codified know-how 
and repository of best practice is currently as embryonic as 
the sector itself.
Readers of the Margins to Mainstream report reached 
out from far and wide to ask for advice on how to start 
(or do even more) with impact investing. While we could 
hypothesize and make suggestions, it is only experienced 
impact investors who can speak with authority about what 
does and doesn’t work, and why. With that in mind, we 
curated this collection of short, action-oriented and insightful 
thought pieces on how to put impact investing to work.
Because the sector is in a nascent stage and engages 
diverse individuals, organizations and societies, no one 
solution will apply to every situation. Rather, this publication 
can serve as a trailhead and as a semi-trodden path for new 
practitioners; but much more trail-blazing will be necessary 
before the sector can call itself mature.
We advocate learning by doing, failing fast, synthesizing 
feedback and quickly re-engineering shortcomings into 
a more informed approach. Above all, we believe that 
intentions (and certainly good ones) matter with every 
action and step towards building a new sector. With these 
principles in mind, we can collaboratively and proactively 
ensure that the impact investing sector is on the best path 
forward.
For the many key players whose wisdom and expertise 
could not be represented here, we look forward to hearing 
from you and, where possible, including your perspective 
in future efforts to help bring the impact investing sector to 
maturity

2. Introduction to the 
Mainstreaming Impact 
Investing Initiative

Nearly two years ago, at its Annual Meeting in Davos in 
January 2012, the World Economic Forum convened 
a discussion among mainstream investors and social 
entrepreneurs on how to harness the hype of Impact 
Investing. While the list of reasons why impact investing 
would remain niche seemed overwhelming, bringing it into 
the mainstream was too important an opportunity not to 
pursue.
With this in mind, the Forum launched the Mainstreaming 
Impact Investing Initiative. The first milestone – From the 
Margins to the Mainstream: Assessment of the Impact 
Investment Sector and Opportunities to Engage Mainstream 
Investors– was released in September 2013 and provided 
an overview of the sector, identified challenges constraining 
the flow of capital, and laid the groundwork for mainstream 
investors to begin a meaningful discussion on impact 
investment. Most of the constraints identified fit into one 
of four broad, overarching challenges: an early-stage 
ecosystem; small average deal size; the fit within an asset 
allocation framework; and double bottom line.
From Ideas to Practice, Pilots to Strategy is the second 
publication in the Forum’s Mainstreaming Impact Investing 
Initiative. The report takes a deeper look at why and how 
asset owners began to include impact investing in their 
portfolios and continue to do so today, and how they 
overcame operational and cultural constraints affecting 
capital flow. Given that impact investing expertise is 
spread among dozens if not hundreds of practitioners and 
academics, the report is a curation of some –but certainly 
not all –of those leading voices. The 15 articles are meant 
to provide investors, intermediaries and policy-makers with 
actionable insights on how to incorporate impact investing 
into their work.

Target Audience for Ideas to Practice, Pilots to 
Strategy
This publication’s target audience includes three key groups: 
(1) investors looking to start impact investing; 2) active 
impact investors looking to expand impact investing from 
a limited part of their work to a full-fledged strategy; and 
(3) intermediaries, policy-makers and development finance 
institutions whose support is vital for the sector’s growth. 
Since large investors often have a proportionally large 
influence on a sector, a key focus is on highlighting best 
practices or frameworks from large asset owners and asset 
managers.
Motivation and Scope of Ideas to Practice, Pilots 
to Strategy
The report’s goals are to show how mainstream investors 
and intermediaries have overcome the challenges in the 
impact investment sector, and to democratize the insights 
and expertise for anyone and everyone interested in the 
field. Divided into four main sections, the report contains 
lessons learned from practitioner’s experience, and 
showcases best practices, organizational structures and 
innovative instruments that asset owners, asset managers, 
financial institutions and impact investors have successfully 
implemented.
The strategic case for impact investing from the mainstream 
investor’s perspective is the focus of “More than an Idea: 
Creating the Case for Impact Investing”. This section 
includes the following key messages:
– Reflecting environmental, social and governance (ESG) 
standards in the investment process, across asset 
classes and alongside traditional financial metrics and 
competent risk management practices, can generate 
superior risk-adjusted, long-term investment returns. 
Moreover, inadequate ESG capability can lead to poor 
financial performance.
– Institutional investors can shape markets and encourage 
managers to design products with social impact. Recent 
data indicates that many institutional investors look 
to incorporate ESG standards into their investment 
decision-making. However, so that impact investment 
strategy becomes an institutional priority, decisions 

From Ideas to Practice, Pilots to Strategy Practical Solutions and Actionable Insights on How to Do Impact Investing