Is there a trade-off between return and impact? Must investors sacrifice return when investing with impact in mind? We believe this is the wrong way to look at impact investing – alignment between return and impact varies across strategies, asset classes and types of impact.
The Efficient-Impact Frontier provides us with a new lens. Instead of worrying about trade-offs, investors can (and should) optimise impact based on anticipated risk-adjusted return, and vice-versa. In other words, all investors can (and should) seek those investments that make the largest impact (however a given investor defines impact - which can vary greatly) within their preferred return band.