There are different definitions of impact in circulation. This makes it difficult to see an investment as impact or non-impact. It’s a bit like with beauty: “Impact is in the eye of the beholder”. How you could deal with this: i) do not stick the label impact on an investment in advance ii) analyse the investment according to different impact characteristics iii) set your standard with respect to these characteristics iv) and determine whether or not the investment suits you as an investor.
You can break down an (impact) investment into different dimensions, properties. You can ‘score’ the investment on a dimension. For each dimension, you can also set a ‘standard’ that you think an investment should meet. By considering all dimensions of different investment alternatives simultaneously, you get a better understanding of choices you make.
The picture above compares two alternatives. Based on the impact definition that heavily incentivises additionality, only investment B should have the impact predicate. A high degree of additionality could be popularly interpreted as: you are a catalyst with your investment rather than being one of many who participate in an investment.
Alternative A does not achieve the same degree of additionality (also slightly less than what you have set as a norm), but it is, however, heavily intentional and delivers higher materiality. A high degree of intentionality is that it has been fully upfront, and intended to be focused on impact and that a so-called ‘theory of change’ has been formulated. An accidental impact side effect of an investment does not apply. A high degree of materiality is that the impact has substantial effect for whom it is intended (size target group?).
Is or is investment B now more impactful than investment A? Can one be called impact investment and not the other? Or do we need a more integral view here that maps the impact of our investments? This seems like a rhetorical question to us.
This certainly does not complete the story. There are other dimensions (e.g. theme or SDG) on which you also want to look at your (impact) investments. There are also a number of dimensions that have not been explained here; more on those later.