NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, April 18, 2017

The global-investment firm Cambridge Associates will unveil in a couple weeks real-asset impact-investing benchmarks in real estate, infrastructure, and timber. The new benchmarks “focus on the financial performance of the private funds, categorizing them by year and size,” says Jessica Matthews, managing director at Cambridge Associates. But the firm also parses its benchmarks and promise to deliver “a deep-dive analysis” on intended impacts.

Cambridge Associates is tackling an issue long bedeviling the do-good investment sector: How do you measure financial returns and impact when trying to invest in a way that positively addresses social or environmental issues? “One of the challenges in this space is the lack of knowledge, prompting people to talk about financial performance abstractly,” she says. “In the context of some family offices, you often hear a debate right out of the gate speculating whether impact investing means expecting lower returns.”

Benchmarks, of course, help investors measure their returns against a sector standard. Cambridge Associates is not new to this space and has already created the pioneering Impact Investing Benchmark. This benchmark tracks 56 private impact funds that invested in companies, organizations, and other funds intending to generate social and environmental impact, alongside financial returns.