Impact-linked finance: what do we know about it so far?

17 June 2021

Investing for Good has published a new report on impact-linked finance, exploring the practice of linking financial incentives to the creation of impact.

The report (A review of impact-linked finance: does incentivising impact work?) by Investing for Good, and commissioned by Esmée, provides a global review of impact-linked finance and explores the potential for adaptability for the UK social and impact investment market.

What is impact-linked finance?

Key market-builder Roots of Impact define impact-linked finance as "the linking of financial rewards for market-based organisations to the achievements of positive social outcomes."

Findings from the review demonstrates that impact-linked finance can be a powerful tool in the construction of investor / investee alignment, which enables the creation of long-term sustainable impact delivery. Whilst this study has an investor focus, the next step is to develop more understanding of the demand from investees for this tool.

The study was launched in June 2021 with an event which welcomed over 200 registered participants from across the globe, a further demonstration of the level of interest in the topic.

Learn more

We have been trialling impact-linked finance as part of our impact-first approach to social investment. You can learn more about our impact-first approach in a blog for Social Enterprise UK.

SASC housing fund - P3 charity

Social Investment

We believe that social investment is a powerful and financially sustainable tool we use, alongside grants and our own actions, to achieve our impact goals. Learn more about our approach to social investment.

  • FairforYou_2.jpg

    How our impact-first approach led us to our first Perpetual Bond

    We share our learning from our social investment into Fair for You and our first Perpetual Bond along with how it could open up finance options for social purpose organisations looking for equity-like investment.

    Read more
  • Social-Change-Home-Page-Highlight_560x560px.jpg

    Insights in Brief: Social Investment and COVID-19

    A new report sharing what we've learned from our social investments in light of Coronavirus, and how we could use this to inform the stages of rescue, recovery and revival.

    Read more
  • Insights from 10 years of social investment

    Evolution not revolution, 10 years of social investment

    To mark the 10th anniversary of our Social Investment Fund, we’ve written a report reflecting on the achievements, insights and lessons learned to date.

    Read more
Latest

You might be interested in

  • People working together outdoors in a green field, crouching and holding tools while tending plants and tying or installing lines among the grass.
    16 October 2026

    Space for nature: what we’re learning and what next for Esmée

    Esmée’s Director of Our Natural World, Liam McAleese, reflects on the findings of a review into our work towards space for nature and the recommendations for Esmée’s work going forwards.

    Read more
  • A nature-themed collage with a green landscape, birds and animals in illustration, a circular photo of a waterfall/river, and a small scene of people working in a field

    Nature recovery needs more than “fairy dust” to create lasting change, report finds

    Across the UK, communities, farmers and charities are showing nature recovery is possible, and it has benefits for food security, local economies and climate resilience. However, systemic barriers are holding back progress. Esmée's new Space for Nature report by 3KQ calls for greater and sustained investment to create lasting change.

    Read more
  • Nudge Community Builders-Union Street Party 2023 (Hanna Collins)

    Community-driven enterprise and regeneration review: Invitation to tender

    We are looking to work with an external consultant or organisation to review our work and funding towards our Community-driven enterprise and regeneration priority.

    Read more
  • View from a hillside over a patchwork countryside of green fields and hedgerows, with a winding road through trees and distant hills beneath cloudy skies-Stroud

    Is resilience the new greenwash?

    Esmée’s Director of Our Natural World, Liam McAleese, reflects on growing concerns about climate-related risks in food and farming and what genuine resilience means. He also shares how we’re thinking about this in our work on nature-friendly farming, as well our role as an investor.

    Read more