Its popularity reflects a shift in some investor priorities. Heightened awareness of climate change, social inequality and other global issues has prompted many to reconsider the role of capital in building a fairer, more sustainable world. Demand is also rising: according to the Impact Investing Institute, 81% of UK adults want their investments to generate positive social or environmental impact alongside financial returns.
Impact investing is an investment strategy that aims to generate both competitive financial returns and positive, measurable social and environmental outcomes. It channels capital into initiatives that create meaningful, long-term change.
Three key principles underpin impact investing
- Dual objective: Seeking financial returns alongside positive environmental or social outcomes
- Intentionality: Impact is a deliberate goal, not a byproduct
- Measurement: Impact must be tracked and evidenced
The dual objective is what sets impact investing apart from traditional investing or philanthropy. While the emphasis may vary, impact investors pursue both outcomes, even if it means slightly lower returns to achieve greater positive impact.
Intentionality is central. Impact is built into the investment strategy from the outset, with the aim of generating additional, measurable change that wouldn’t otherwise happen.
Measurement ensures that impact is real, consistent, and aligned with need. By assessing both the positive and negative outcomes of their investments, impact investors can make better decisions and demonstrate transparency.
How do we measure impact in real estate?
In real estate we use a structured ‘triple lens’ framework that provides robust evidence of impact and enables clear communication with a range of stakeholders:
- KPIs: Start with quantitative Key Performance Indicators that track progress, such as the number of affordable homes delivered or tonnes of carbon avoided through clean energy generation.
- Monetary value: These KPIs are translated into financial terms using environmental economics, allowing comparisons across different types of impact. This highlights trade-offs, synergies, and the overall scale of value being generated.
- Insights: Qualitative stories, from wellbeing improvements to community empowerment, help bring the data to life and show the human side of impact that numbers alone can’t fully capture.
Impact investing in practice
Places for London, the property arm of Transport for London, exemplifies impact investing in action. As a major landowner, it delivers social, environmental and economic benefits alongside financial returns, helping shape inclusive, low-carbon neighbourhoods across London.
It tracks and optimises its impact using the triple lens approach. Firstly, it gathers KPIs through its Sustainable Development Framework (SDF) and Strategic Impact Framework (SIF). The SDF aligns developments with goals around inclusion, health and climate resilience through every stage – from design to long-term stewardship. The evolving SIF builds on this, capturing KPIs across both new and existing properties.
Secondly, the SIF uses these KPIs to estimate the monetary value of Places’ impact. This allows the organisation to assess total societal value, compare options, and strengthen investment cases with credible data that speaks to a broad range of stakeholders.
Finally, Places captures qualitative insights that highlight the real-world effects of its work – from construction trainees finding long-term employment to community members benefiting from new spaces and services. These stories help ensure its impact is both meaningful and visible.
This well-rounded approach enables Places for London to guide better design and investment decisions, communicate effectively with partners, and support strategic goals like affordable housing and Net Zero.
Looking ahead
The Global Impact Investing Network (GIIN) estimates the global impact investing market at around $1.57 trillion, with reported growth of about 21% per year since 2019. While these figures suggest rising interest, it’s not without challenges. The shift points to a gradual move in capital markets toward investments that consider social and environmental factors alongside financial returns.
Further information
Contact Blair Hershaw or Georgina Nimmo
Real Estate Insights Podcast: Savills Earth Series 2: Using environmental economics to value impact
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