What are the three characteristics of an impact investment?

What are the three characteristics of an impact investment?

• A. High liquidity, low risk, and steady income
• B. Intention; Impact measurement; Impact management
• C. Tax efficiency, diversification, and hedging
• D. Market share, brand value, and governance

Answer: (B)

Impact investing is defined by pursuing social or environmental benefits alongside financial returns. The three characteristics capture that approach: intention means the investor explicitly seeks to achieve a positive impact, not merely profit. Impact measurement means outcomes are defined, tracked, and reported using agreed metrics to show the actual social or environmental results. Impact management means actively using those insights to steer investments, adjust strategies, and improve outcomes over time. Together, these ensure the investment aligns with a stated impact goal and that progress is transparent and actionable. The other options miss this combination. One emphasizes financial attributes like liquidity, risk, and steady income, which describe traditional finance rather than impact outcomes. Another highlights tax efficiency, diversification, and hedging—portfolio risk-management tools that don’t address impact. The last lists market share, brand value, and governance—useful business metrics but not the explicit trio that defines impact investing.

Impact investing is defined by pursuing social or environmental benefits alongside financial returns. The three characteristics capture that approach: intention means the investor explicitly seeks to achieve a positive impact, not merely profit. Impact measurement means outcomes are defined, tracked, and reported using agreed metrics to show the actual social or environmental results. Impact management means actively using those insights to steer investments, adjust strategies, and improve outcomes over time. Together, these ensure the investment aligns with a stated impact goal and that progress is transparent and actionable.

The other options miss this combination. One emphasizes financial attributes like liquidity, risk, and steady income, which describe traditional finance rather than impact outcomes. Another highlights tax efficiency, diversification, and hedging—portfolio risk-management tools that don’t address impact. The last lists market share, brand value, and governance—useful business metrics but not the explicit trio that defines impact investing.