Sometimes one bottom line is not enough. Many investors are no longer satisfied simply by turning a profit. More and more also want their investments to generate a positive impact in the world.

That means additional capital can be devoted to the globe’s most urgent challenges – like tackling poverty, confronting climate change, and providing access to clean water and power. But whether investors achieve a double bottom line – profit plus impact – depends on how funds are invested and managed for impact. This month, 60 global investment firms and development finance institutions will take the first historic step, embracing a new set of standards that will bring discipline, transparency, and credibility to the impact investing market. We now want many others to join us – it will be good for business and good for the world. Here’s why. Impact investing, now a relatively small market, is poised to grow rapidly as financial assets move from Baby Boomers to Generation X and Millennials. These younger investors are keenly interested in environmentally and socially motivated investment – and they are willing to put their money to work in ways that benefit society. According to Accenture, $30 trillion in wealth will be transferred from Baby Boomers over the next three decades in North America alone. The opportunity is clear, thanks to this potentially transformative alignment between the demands of investors and the world’s development needs, estimated at several trillion dollars annually to conform with the UN’s Sustainable Development Goals. We still need more data on whether impact investing can bring the same profits as other investments, but there are some promising examples. For instance, the long-term performance of the International Finance Corporation’s own portfolio shows you can achieve impact in a wide range of developing markets without having to accept lower returns. On average, the IFC’s realised equity returns outperformed the MSCI Emerging Market Index from 1988 through 2016. Even more interestingly, our average returns were higher in lower-middle-income countries than in upper-middle-income countries. The private impact investing market is now measured in the billions, but it should be in the trillions. The IFC estimates that investor appetite for impact investment could today be as much as $26 trillion. But investors will need to have confidence that “impact” is not just a marketing slogan. They need to know exactly what constitutes an impact investment, how their funds are being managed, and how the impact is measured. Until now, there have been no clear market standards – and that is keeping investors from putting funds into impact products. The new Operating Principles for Impact Management are designed to address these roadblocks and help bring impact…

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