The Little Book of Impact Investing

Explore the strategies of impact investing that deliver financial gains and positive results for people and the planet

In The Little Book of Impact Investing: Aligning Profit and Purpose to Change the World, veteran investor and author Priya Parrish delivers a timely, inspiring, and practical exploration of an investing discipline that is rapidly taking center stage in contemporary finance. In the book, you'll explore how and why impact investing has become an essential strategy for retail and institutional investors around the world and how it can help you build and manage high-performing portfolios while making a positive difference in the world around you.

The author explains the universe of opportunities made available by impact investing by diving deep into both the public and private markets. You'll learn how the discipline is related to modern portfolio theory, diversity considerations, issues of climate change, sustainable investing, and recent controversies about ESG investing.

You'll also discover:

• Where impact investing came from, how it's shaping markets today, and where it's going in the near future
• Impact investing goals and how they relate to financial returns and risk
• The management tools utilized by leading impact investors to improve performance.

An essential resource for retail and institutional investors, The Little Book of Impact Investing is destined to become the gold standard in impact investing reference books for anyone seeking and up-to-date and insightful discussion of one of the most exciting and influential investment disciplines in contemporary finance.

Preface xi

Part One A Brief Introduction To Impact Investing 1

Chapter One What Is Impact Investing? 3

Chapter Two Why Now? The Right Time for Creative Disruption 19

Chapter Three Hold On, What About ESG? 31

Chapter Four My Journey to Impact Investing 43

Chapter Five How Impact Investing Grew Up 53

Chapter Six Who Can Be an Impact Investor? 67

Chapter Seven Other Roads to the Same Place 79

Part Two How to Be An Impact Investor 89

Chapter Eight How Impact Can Drive Returns 91

Chapter Nine Where Do You Start? Deciding Where Impact Belongs in Your Portfolio 101

Chapter Ten Beyond the Label: Identifying Impactful Companies 109

Chapter Eleven If You Don’t Measure It, Is It Real? 119

Chapter Twelve Building Better Businesses: Impact Management 131

Chapter Thirteen Stuck in the Mud: When Impact Gets Complicated 143

Part Three The Impact Opportunity Set 153

Chapter Fourteen Where Can You Find Impact Investments? 155

Chapter Fifteen Economic Opportunity 161

Chapter Sixteen Health and Wellness 175

Chapter Seventeen Environmental Sustainability 189

Chapter Eighteen Public Markets 201

Chapter Nineteen Social Impact Bonds 211

Chapter Twenty Alternative Ownership Structures 217

Conclusion 229

Notes 235

Acknowledgments 249

About the Author 253

Priya Parrish is a Partner and the Chief Investment Officer at Impact Engine, an institutional venture capital and private equity investor driving positive impact in economic opportunity, environmental sustainability, and health equity. She is also an Adjunct Assistant Professor of Strategy and Impact Investor in Residence at the University of Chicago Booth School of Business, and serves as an adviser to investment firms developing and managing impact investment strategies. Parrish holds a BS fromBabson College and an MBA from the Universityof Chicago Booth School of Business.

In The Little Book of Impact Investing: Aligning Profit and Purpose to Change the World, veteran investor and educator Priya Parrish delivers an insightful, inspiring, and practical discussion of why impact investing is rapidly gaining traction with retail and institutional investors. In the book, you’ll explore the origins and history of impact investing, common myths and misunderstandings, and how smart impact investors can drive social and environmental good while generating profits and lowering risk.

The author explains the vast opportunities available to people who embrace impact investing, including discussions of investment strategies found in both the public and private markets. You’ll learn how impact investing aligns with modern portfolio theory while also solving for pressing societal challenges, from climate mitigation to disparities in health outcomes and economic mobility.

The Little Book of Impact Investing walks you through exactly why and how to become an impact investor. You’ll discover the tools that impact investors use to create measurable impact and strong financial returns. Finally, you’ll find the author’s persuasive and compelling arguments for why impact investing represents the future of capitalism and how you can manage your own portfolio to benefit from this approach.

Praise for THE LITTLE BOOK OF IMPACT INVESTING

“The Little Book of Impact Investing is a must-read for new and experienced impact investors. Priya Parrish demonstrates how smart investing can drive both financial success and societal impact, providing valuable insights and examples for retail and institutional investors alike.”
—LUKAS WALTON, Founder and CEO, Builders Vision

“Priya Parrish’s The Little Book of Impact Investing is a terrific guide to investing in for-profit, positive impact companies. Drawing from her long experience, Parrish shares actionable advice to help others succeed in this dynamic segment of the global impact investing field.”
—DEBRA SCHWARTZ, Managing Director of Impact Investments, MacArthur Foundation

“Some of the world’s biggest challenges also make great investment opportunities. As a trailblazer in the field of impact investing, Priya Parrish’s book teaches effective investment strategies to drive access to quality healthcare, world class education, clean air and water, and healthy and affordable food, all while earning a profit.”
—ALEXANDER CHALOFF, Chief Investment Officer, Bernstein Private Wealth Management

“Priya Parrish provides a masterful guide to transform anyone into an impact investor. The frameworks, examples, and personal stories illuminate the vast range of opportunities for individuals to align their financial and social impact objectives. The book is an indispensable resource for understanding the promise and challenges of the rapidly growing impact investing ecosystem.”
—ROBERT H. GERTNER, Joel F. Gemunder Professor of Strategy and Finance, The University of Chicago Booth School of Business, and John Edwardson Faculty Director, Rustandy Center for Social Sector Innovation