The Evolution of Impact Investing: Measuring Social and Financial Returns Across Sectors

Abstract

This research investigate the development of impact investing as a strategic approach to generating financial returns and social and environmental returns. Based on a systematic literature review and comparative sectoral analysis, the study investigates how dual returns are conceptualized and operationalized in key sectors (viz., education, healthcare, renewable energy and fintech), and how these are assessed. The paper explores the effectiveness of current measurement frameworks such as IRIS+, SROI and SDG alignment when applied to different types of investment, considering both what they achieve and what they lack. Drawing on examples from Sub-Saharan Africa, India, and Southeast Asia, the research highlights the trade-offs and synergies characteristic of sector-specific impact strategies. The findings underscore the importance of blended finance, catalytic capital and policy coherence in scaling the credible models of impact investing. The research adds to an increasingly rich literature by proposing an interdisciplinary framework for combined rate of return assessment and by pinpointing levers to strengthen accountability, scalability and investor alignment. It ends with an exhortation to go further together and get under the hood of new tools, such as AI-driven impact analytics and climate-linked finance, to inform future practice and theory.