22 March 2022 | Category: Policy

Can we learn to invest in impact?

By Sabine Desczka

Senior Research Coordinator Impact Investment at Wageningen ...

When asking the question if we can learn to integrate impact investment into societal impact, the answer is automatically yes, because we have the proof of concept. Why are we not doing it, is a harder question to answer as it is intrinsically not true to state that business does not care about the environment and the people. The key to success is beginning to integrate societal impact features in our investment decisions and look at the broader picture.

Peruvian cannery

Let’s take an example. A Peruvian cannery with not so much of a profit perspective becomes a lot more interesting when you look at it with a helicopter view. This particular company had huge potential to reduce food waste in the value chain. Also, the factory enabled poor farmers in the area to move from low value crops to high value crops and overcame major infrastructural problems in the value chain. It provided access to local and international markets.

Still, would investors let go of their financial risk calculation models? Providing new impact measurements actually brought to light the advantages and in the end: even when profits are not that high, the broader perspective made the difference for many people in the region. We already knew this in 2012. Thus rethinking benefits, risks and common interests can help us to make better choices, but only if we can find a convincing way forward. Can we learn from each other?

Different concepts of impact

Business and society have different concepts of impact. When discussing with farmers there is one thing that really makes them angry: people have two faces. As consumers, their decisions when buying cheap food in the supermarket are different from them as voting citizens, where they opt for more sustainable measures in parliamentary elections or call on farmers to produce differently. How can one make investment decisions given this minefield of decisions? However, the truth is, the concepts of impact are not very much aligned.

To understand investors and business owners better in their strive towards sustainability, it is important to realize that when it comes to financial decisions, most investors think that a bird in the hand is worth two in the bush. There are many risks to consider when building a company and adding societal risks does not make it easier. On top of that, investors nowadays feel very responsible for their company’s actions. It is easily said; “we want to reduce poverty in the world”, but what if we cannot live up to that promise?

Instinct prevails over facts

When it comes to decisions, instinct prevails over the scientific facts in business, because the facts are only known in the future. Business knows change will happen when people want it and are willing to pay for it.  Investors understand better than policy makers and researchers that when you want to achieve change, social proof and social norms and setting the good example are often more important than the facts. They rather have a happy client statement now than knowing to have contributed to CO2 reductions in 2050. For scientists it is rather new to accept client reviews and platform behavior as knowledge and we have only started to understand how it can help to calibrate impact.

Investors also understand better than academics that people do not always do what they say. When they say that they care for the environment, will they also take the effort to collect all coffee capsules and bring them to a special recycling station? However, based on scientific evidence, we know that citizens (can) adopt social and environmentally friendly norms and behaviors, given someone sets the good example and that there is high level of trust among citizens, entrepreneurs and government. Social proof might very well be a stronger indicator for change than predicted growth trends.

Business, society, government and planet

Social skills are only now entering the world of innovation that is ruled by technical features, numbers, testing and rethinking. It is this feedback loop between financial sense, technological progress and social skills that defines the future hub. I guess, we all have not yet discovered  what this means for defining investable projects. Controversially enough, investors promote their financial risk models and rationality of decision, not their instinct and social innovation skills.

Thus, the road that leads to more collaboration between business, society, government and planet is the road that leads to impact investment. If we can create a common understanding of impact for all parties involved, impact will follow.

Call for partners

Wageningen Economic Research provides valuable insights to fill the knowledge gap between the agrifood sector and impact investors. We work evidence based with quantitative and mixed method research design to provide the metrics underlying impact investment. With this blog, we want to raise awareness for the impact investment movement and we want to increase our outreach to find likeminded readers to partner up create new knowledge and comment on our intentions to support impact investment. If you are interested, please contact Sabine Desczka.


  • Löwenhave, B. Behavioral Investment Banking – Using Psychology to Improve Advisory Business, Aalto Capital Group, in: Alain Samson(ed.) The Behavioral Economics Guide 2019, p.17-27

By Sabine Desczka

Senior Research Coordinator Impact Investment at Wageningen Economic Research, part of WUR, the Netherlands. Economic (1999) and legal (2010) background from Hamburg University, Germany and Leiden University, the Netherlands, on impact research. Current research interests: Impact Investment in agro-food and climate, Impact Assessment, Impact Evaluation, Cost Benefit Analysis, Ecosystems analysis and systems thinking, blended finance and knowledge creation for sustainable development.

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