Introduction

Corporate impact investing integrates business goals with measurable social and environmental outcomes. This report provides approaches to corporate impact investing, showing how businesses and foundations align financial returns with positive impacts. Market data estimates the European impact investment market at €80 billion, representing 0.5% of the total market, with a projected growth rate of 26% annually. This expansion aligns with rising stakeholder demands for businesses to adopt sustainable practices.

What is impact investing?

Positioned between catalytic grant-making and sustainable investing, impact investing specifically targets social and environmental challenges with measurable outcomes. Its three core principles—intentionality, measurability, and additionality—set it apart from other investments. This approach enables companies to achieve financial returns while contributing to social change. The report also notes that corporate foundations are well-positioned to drive impact investing efforts through ring-fenced resources and a greater freedom to experiment with high-impact initiatives.

Why companies should consider impact investing

Corporate impact investing offers significant “win-win” benefits for both impact and business agendas, as well as for investees and investors. For impact, it bridges the ‘missing middle’ funding gap, helps scale innovations, and provides multi-faceted support for sustainable solutions. For business, it provides insights into underserved markets, enhances corporate purpose, and improves talent acquisition. For example, companies like ENGIE use impact investing to expand into African markets, leveraging portfolio insights for market adaptation. Companies pursuing this approach can address challenges such as supply chain sustainability while also gaining a competitive edge in inclusive business practices.

Approaches

Impact investing can be pursued either directly (through internal teams, corporate foundations, or impact funds) or indirectly (via intermediaries or partnerships). Direct approaches allow companies to integrate impact with their strategic goals, while foundations often take the lead in impact initiatives to allow separation from commercial interests. Corporate foundations such as Johnson & Johnson’s $50 million impact fund demonstrate the flexibility and innovation advantages of managing impact investments separately, supporting health equity for underserved communities globally.

Creating synergies with impact investing

Effective impact investing maximises synergies across corporate functions. The report highlights that collaboration with corporate venture capital or sustainability teams can reinforce impact initiatives, while embedding impact businesses into supply chains can drive social procurement. Involving human resources and product innovation departments can broaden corporate impact while equipping employees with valuable skills for corporate growth.

Building the impact and business cases

Building buy-in for impact investing requires balancing the impact and business cases. The impact case emphasises bridging the funding gap in underserved markets and addressing social or environmental challenges. The business case outlines benefits such as new market insights and the adaptation of products to meet emerging consumer needs. This dual approach supports long-term corporate objectives, as seen in companies like IKEA, which integrates products from social entrepreneurs to expand its value chain inclusively.

Get started

The report outlines five essential steps for launching impact investing: cultivating a suitable mindset, choosing the right strategy, engaging stakeholders, establishing governance structures, and beginning investments. Key recommendations include setting clear success metrics, leveraging internal expertise, and starting with small investments. The report suggests celebrating early successes and learning from setbacks as practical ways to strengthen early impact investing efforts.

Outlook

Corporate impact investing is evolving as businesses recognise its potential to align financial and impact objectives. Drivers include regulatory changes like the Corporate Sustainability Reporting Directive (CSRD) and increased focus on sustainability in business strategies. For effectiveness, companies are advised to connect impact investing across corporate functions and consider multiple approaches to maximise the spectrum of impact opportunities. Examples such as Philips and Visa demonstrate the benefits of integrated impact investing strategies that strengthen both impact and business agendas, bridging the gap between profit and purpose.