Impact investments opportunities and limitations

Abstract

In recent decades, global economic community has increasingly emphasized the need to balance financial returns with social, environmental, and other non-financial values. In this context, the impact investing concept is an important step in investment strategies development aimed at achieving not only financial returns, but also positive social and environmental impacts. The purpose of the study is to provide a comprehensive and objective analysis of the opportunities and constraints accompanying impact investing in order to develop a deeper understanding of its essence and contribution to sustainable economic and social development and, as a consequence, to ensure its informed and effective use to achieve positive social and environmental transformation. The research methodology provides for the search and collection of scientific information with the subsequent use of meta-analysis and meta-synthesis methods, the application of Goldratt’s constraints theory and the use of system analysis. The theoretical basis is provided by studies and publications in the field of impact investing, sustainable development, social responsibility, and standards of non-financial, integrated reporting, including articles, monographs, reports, and official documents of organizations engaged in the investments’ development with positive social and environmental impact. The study has identified three significant perspectives provided by the impact investing paradigm and articulated three inherent limitations to the use of this investment practice. The paper has also confirmed that the identified perspectives and limitations show a strong interconnection and influence on each other, which is important for a full and deep understanding of the role and significance of impact investing in the contemporary context.