The emerging trend of socially responsible “impact investing” is grappling with growing pains. Big questions loom on the horizon. How should investors measure environmental or social impact? How can they prove their investments are sincere?

Panelists at a summit hosted by cleantech incubator Vertue Lab (formerly Oregon BEST) on Wednesday addressed the challenges and opportunities for impact investors, as they rethink the performance expectations for business.

Abhilash Mudaliar, research director at the nonprofit Global Impact Investing Network, warned that as more major players enter the impact game, consumers need to be wary of “impact-washing.” Like greenwashers, impact-washers promote ostensibly sustainable investments without measuring the social or environmental impact. As with other trendy labels like diversity and sustainability, increasing popularity could give way to abuse.

Mudaliar says he hasn’t seen much impact-washing to date, but it could be a concern in the future. A set of expectations and standard measurements for impact have yet to be developed.  “How can we tighten the expectations of behavior?” he asked rhetorically. “What do you need to show to prove you’re an impact investor?”

This year saw a surge in impact investments in enterprises that pursue a social or environmental mission alongside profit. Impact assets under management doubled from $114 billion to $228 billion over the past year. The trend crossed private and public, emerging and developed markets.

Panelists attributed the trend to the rise of a new generation of millennial and women leaders who expect social and environmental responsibility from business. These demographic groups are committed to combating climate change, ensuring supply chain transparency and creating sustainable jobs.

“It’s becoming table stakes now,” said David Griest, managing director at SJF Ventures. Griest’s firm manages a $125 million impact fund, which invests in companies spanning renewables, to sustainable food to transportation. “More entrepreneurs who are millennials are aligning values with their businesses.”

Investors have taken notice. Even major private equity firms criticized for putting profits over people are looking at impact investments. Bain Capital launched a $390 million Double Impact Fund. Recently the fund made an equity investment in Portland-based Sustainable Restaurant Group, Bamboo Sushi’s parent company.

Yet as the approach gains popularity, it’s run up against a number of barriers. One is the dearth of data on the performance of impact companies. It’s important to develop tools, Mudiliar said, that allow companies in the same sector to report against similar standards.

Impact funds also face pressure from investors, who sometimes need convincing about the return on investment. A tension can arise between generating short-term financial returns and long-term social good.

“I think we struggle with showing return while taking outsize risks, and how to balance that,” said Elizabeth Carey, manager of the Oregon Community Foundation’s finance fund.

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