Impact investment has gained significant traction in recent years, reflecting a growing desire among investors to generate both financial returns and positive social or environmental outcomes. This investment approach aligns financial goals with the intent to create a more sustainable and equitable world. However, navigating the impact investment landscape can be complex. 

To make informed decisions, it's crucial to understand what to look for when considering impact investment, so we’ve created a ten-point guideline to help underpin any decision making process in this sector. 

Clear and Measurable Impact Goals

When evaluating impact investments, start by examining the underlying goals and objectives. A credible impact investment opportunity should have clearly defined and measurable impact goals. These goals should be specific, time-bound, and realistic, enabling you to gauge the effectiveness of the investment.

Impact Measurement and Evaluation

Robust impact measurement and evaluation are critical to ensuring that an investment is achieving its intended outcomes. Look for investments that use credible metrics and methodologies to assess their impact, providing you with the assurance that your investment is making a difference.

Comprehensive Due Diligence

Just like any other investment, impact investments require thorough due diligence. Investigate the financial stability, past performance, and management of the project or organization. Additionally, scrutinize the environmental, social, and governance (ESG) practices of the investment, looking for a commitment to sustainable practices and ethical governance.

Transparent Reporting

Transparency is a critical aspect of impact investing. Ensure that the investment opportunity provides regular, comprehensive, and transparent reports on its impact activities and financial performance. These reports should include not only the successes but also the challenges faced.

Risk Assessment

All investments come with risks, and impact investments are no exception. To make a sound decision, assess the risks associated with the investment. Understanding the potential financial and impact-related risks allows you to make informed choices and develop mitigation strategies.

Scalability and Sustainability

Consider the long-term viability of the impact investment. Look for projects that have the potential to scale their impact over time. Sustainable impact investments are those that can generate positive change for years to come.

Legal and Regulatory Compliance

Ensure that the impact investment opportunity complies with all relevant laws and regulations. Understanding the legal framework can protect your investment from potential risks and challenges.

Exit Strategy

It's important to have a clear exit strategy for your impact investment. Determine how and when you can liquidate or reinvest your capital, and assess whether the exit strategy aligns with your financial and impact goals.

Diversification

Diversification is a key principle of investment. Consider building a diversified impact investment portfolio to spread risk and enhance the likelihood of achieving your desired outcomes. Diversification also allows you to invest in various causes or sectors that matter to you.

Alignment with Personal Values and Mission

Finally, every investor's values and missions are unique. A successful impact investment is one that aligns with your personal or organizational values. It's important to identify the causes or issues that matter most to you, as this alignment not only ensures a sense of purpose but also a higher commitment to the investment's success.