- Issue 3 - May 2017, Volume 44

The Government’s Role in Unleashing Impact Investing’s Full Potential

Comment by: Chelsea McGrath

44 PEPP. L. REV. 799 (2017)

Impact investing refers to investments made in organizations, companies, or funds with the intent to generate measurable social or environmental impact along with a financial return.  Since its start in 2008, this industry has become a vibrant tool to address a wide variety of local and global issues, resulting in higher standards of living, lower rates of prison recidivism, clean technology and more.

Impact investing is no longer a novel concept.  Rather, it has successfully pushed the boundaries from the separate methods of conventional investing and philanthropy, blending them together to create sustainable solutions to social and environmental problems.  By using the private sector for good, impact investing has demonstrably proven that “doing well while doing good” can make a difference—harnessing the forces of entrepreneurship, private capital, and innovation to confront today’s challenges.

However, like any emerging financial model, several barriers must be overcome before impact investing can fully flourish.  This Comment calls for the government to use its influence to enact policy and regulatory changes so the industry can achieve sustainable growth.  By reducing risk and encouraging investment, the government can also benefit from the positive social effects impact oriented investments have on communities.  This Comment concludes that promoting impact investing will permit the government to unleash an even wider net of social, environmental, and economic impact.

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