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.

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