24 Jun 2026

Balancing Societal and Financial Risk and the Importance of Impact Investing

Balancing Societal and Financial Risk and the Importance of Impact Investing

🏠 | Blog | Balancing Societal and Financial Risk and the Importance of Impact Investing

Event: Reset Connect London 2026

Date: Wednesday 24 June 2026

Speakers: Clifford James Prior CBE, Board Adviser - Gifftid AI . Nadina Stodiek, Co-Head of Impact Management - Schroders. Ben Constable-Maxwell, Head of Impact Investing - M&G Plc. Stephanie Dawoud, Head of Communications & Engagement - Impact Investing Institute.  , Jonathan Chibafa, Founder & Chief Legal Officer - Forge ESG.

 

Estimated read time: 10 minutes

 

 

The question that follows impact investing everywhere is whether it costs you money. This Reset Connect London 2026 panel took it head on, with a fund manager presenting statistical evidence rather than assertion, and the rest of the panel arguing that performance has stopped being the real obstacle.

What has replaced it is language. Research presented on the panel found investment professionals broadly confused about the difference between impact investing, ESG and sustainable investing, and the most common response from sceptical asset owners is not disagreement but silence.

You will come away with what the performance evidence actually shows, a working distinction between ESG and impact, and a practical view of why mainstream institutional capital stays on the sidelines even where client demand is strongest.

 

 

The Trade-Off Question Now Has a Statistical Answer

 

Nadina Stodiek, Co-Head of Impact Management at Schroders, named the trade-off as the industry’s permanent question: must investors give up financial return to pursue impact? Rather than assert otherwise, Schroders commissioned research with an academic partner at Oxford analysing the financial performance of its listed equities impact universe against a global benchmark.

The findings ran in sequence. Annualised returns from the impact universe came in above benchmark. Testing whether that simply reflected higher risk, the Sharpe ratio also came in above benchmark, indicating better risk-adjusted returns. Testing further for alpha unexplained by the standard statistical factors, the researchers found unexplained alpha remained. Digging into what drove it, companies deriving a higher share of revenue from impactful products and services performed better than the rest.

Stodiek was candid that the team had not known what the analysis would produce, and equally candid about nuance. Concessionary impact investing, where investors deliberately accept lower returns for deeper impact, genuinely exists. So does impact investing run as a market-rate strategy competing with conventional approaches. Conflating the two is where much of the confusion starts.

For a commercial reader, this matters because it changes the standard of the conversation. The claim is now testable, published and open to challenge, which is a different proposition to a values argument.

 

Impact Investing Has Headwinds Like Any Other Investment Style

 

Ben Constable-Maxwell, Head of Impact Investing at M&G, resisted the temptation to claim otherwise. Every investment style has periods out of favour, he said, drawing the comparison with value managers who spent years watching their factor underperform before it reversed.

The current headwind is specific. Interest rate rises make life harder for businesses investing heavily in research or capital expenditure to grow their impact over time, which describes a great many renewables and sustainable infrastructure holdings. Meanwhile defence and oil and gas have performed strongly. His argument is not that this is unreal but that it is short-term, and that impact investing only makes sense on a long time horizon that can ride through it.

Jonathan Chibafa, Founder and Chief Legal Officer of Forge ESG, drew the wider lesson: data quality, evidence-based decision-making and, as he put it, "having the bravery to talk about it". He used the word deliberately, noting that institutions have grown shy of discussing impact investing publicly even where the work is rigorous and evidenced.

For a commercial reader, this matters because candour about underperformance is what makes the performance claims credible. A strategy that claims to work in all conditions is describing something other than an investment approach.

 

Political Rhetoric and Capital Flows Are Moving Separately

 

Stephanie Dawoud, Head of Communications and Engagement at the Impact Investing Institute, drew the distinction that ran through the rest of the session. What is said about sustainable investment and where capital actually goes are two different data sets, and the gap between them is widening.

Her worked example was a US state that introduced legislation restricting investment on environmental and social grounds. Dawoud told the panel that several of the largest insurance underwriters left that market as a result, raising costs borne largely by taxpayers and pension scheme members, and that the law was subsequently challenged in court and struck down earlier this year.

The point she drew from it was about consequences rather than politics. An ideology-first approach to capital allocation produces effects its architects did not intend, and those effects show up in pricing before they show up in rhetoric.

For a commercial reader, this matters because it separates two risks that often get conflated. Reputational and political noise around sustainable investment is real, and it is not the same thing as the direction institutional capital is travelling.

 

The Barrier Is Language, and the Most Common Objection Is Silence

 

The Impact Investing Institute surveyed around 500 investment professionals with a polling partner, deliberately asking a philosophical question: what is the purpose of investing? The first finding was that most respondents were confused about the difference between impact investing, ESG and sustainability, and had no time to work it out.

Constable-Maxwell agreed from the practitioner side. "ESG didn’t really work as a kind of descriptor," he said, noting that even people inside the industry never agreed what it meant. His preferred alternative is to describe what the capital is actually doing: building resilience, supporting inclusion, financing infrastructure that lasts.

Dawoud’s fix is to enter through the audience’s own priorities rather than the industry’s vocabulary. A chief investment officer will readily discuss energy security, and the connection to impact investing is real even if the words are not shared. Her survey also found that pension funds and insurers reported the strongest client demand on sustainability and impact alongside the lowest in-house confidence to meet it. Asked what sceptical asset owners say, her answer was blunt: "the main feedback is silence from those who are sceptical." The image she used was a closed door, with the industry shouting outside it.

For a commercial reader, this matters because a demand and capability gap of that shape is a market opportunity. The buyers exist and say they cannot act on it.

 

Emerging Market Risk Needs Articulating Rather Than Avoiding

 

Chibafa put the geographical problem plainly. The places where impact investment could change most are frequently the places where governance and transparency are weakest, which raises real financial crime exposure across bribery, corruption, money laundering, forced labour and sanctions.

His objection is to the conclusion most institutions draw from that. Deciding a jurisdiction is too difficult and keeping the money in safer markets is a choice, not a risk assessment. The alternative is articulating what the risk looks like, what mitigations are in place and what residual exposure remains, in language a decision-maker recognises, supported by frameworks repeatable across organisations. "We need to ensure that the mainstream are given the confidence to be able to play in this area," he said, rather than leaving it to specialists and development finance.

Stodiek pointed to what moves this at scale. A large Dutch pension fund has publicly committed 30 billion to impact investing by 2030, a modest sum against its total assets but significant for the sector, and the visibility of that commitment has pushed peers in other markets to follow. Constable-Maxwell reported the same geography from fund flows: after a period of UK and European retail interest that has since weakened, the substantial allocations into M&G’s listed equity impact fund over the past year have come largely from Dutch pension funds.

For a commercial reader, this matters because it identifies what actually unlocks allocation. Not a better argument, but a peer of comparable size going first and saying so publicly.

 

There Are Too Many Frameworks, but They Are Not Doing the Same Job

 

Asked whether the proliferation of standards helps or hinders, Chibafa called them a necessary evil. Consistency and regulation are impossible without them, though there is always room to simplify where two frameworks could do the work of five. He also noted the practical cost of UK and EU regulatory divergence for firms operating across both, pointing to the UK’s recent move to align with EU rules on deforestation as a welcome step.

Stodiek offered the structural explanation. Impact investing is an investment approach rather than an asset class or a product, so it travels across every asset class and theme, and each of those generates frameworks of its own. Her advice is to start with the impact principles, which set out how impact is integrated into an investment approach, and only then move to thematic and asset class specifics. She was equally clear that the internal work matters: Schroders built training modules for its own client-facing colleagues before expecting clients to understand the distinction.

Constable-Maxwell added the distinction that gets lost. Climate and nature disclosure frameworks are guidance for companies, the impact principles are operating standards for investors, and the UK and EU sustainability disclosure regimes are regulation. They should be harmonised where they overlap, but they were built for different audiences.

For a commercial reader, this matters because framework fatigue is often a sequencing problem. Most organisations need one integration standard and a small number of thematic ones, not all of them.

 

 

Practical Application, How to Open the Conversation on Impact Investing

 

The panel’s advice was less about investment mechanics than about getting a hearing in the first place.

 

 

Questions to ask

  •  Are we comparing a market-rate impact strategy or a concessionary one, and does the counterparty know which?
  •  Which topic already on our audience’s agenda — energy security, resilience, long-term systemic risk — does this connect to?
  •  Do our client-facing colleagues understand the difference between ESG and impact well enough to explain it?

 

 

Signals to watch

  •  Large asset owners making public, quantified impact allocation commitments that peers can benchmark against
  •  Performance evidence published with methodology attached rather than asserted in marketing
  •  Regulatory divergence between the UK and EU widening or narrowing for cross-border managers

 

 

Traps to avoid

  •  Leading with industry vocabulary that the audience has neither time nor incentive to decode
  •  Treating silence from a sceptical asset owner as disinterest rather than as a closed door
  •  Claiming a strategy that performs in every market condition, which undermines the evidence that does exist

What good looks like, on this panel’s account, is evidence-based storytelling: a claim with published methodology behind it, framed in the language of the person you need to convince.

 

 

Key Takeaways

A fund manager, an asset manager, a market-building institute and a financial crime specialist arrived at a shared conclusion. The performance argument for impact investing is in better shape than the industry’s ability to explain it.

 Schroders’ research on its listed equities impact universe found above-benchmark returns, better risk-adjusted returns and unexplained alpha, with higher impact revenue share associated with stronger performance

  •  Concessionary and market-rate impact investing both exist, and conflating them drives much of the confusion about returns
  •  Investment professionals remain broadly unclear on the difference between impact investing, ESG and sustainability
  •  Pension funds and insurers report the strongest client demand on impact alongside the lowest confidence to act on it
  •  Public, quantified commitments by large asset owners move peers faster than argument does

 

 

Quote of the Session

"The main feedback is silence from those who are sceptical."

Stephanie Dawoud, Head of Communications & Engagement, Impact Investing Institute

 

 

Final Thoughts

The useful thing about this panel was its refusal to oversell. Stodiek was explicit that the impact universe has had defaults and crises like any other, and that nobody should claim otherwise. Constable-Maxwell was equally open that his part of the market has been out of favour while defence and hydrocarbons have run. That candour is what makes the performance research worth reading rather than worth discounting.

What is at stake is whether the industry can talk to people who are not already in it. The evidence exists, the frameworks exist and the client demand exists. On this panel’s reading, what is missing is a way of describing the work that a chief investment officer with 20 minutes and no patience for acronyms would recognise as relevant to the risks already on their desk.

 

 

Speakers

Clifford James Prior CBE, Board Adviser - Gifftid AI (moderator). Cliff advises founders building inclusive markets and has held chief executive roles across social investment, health, entrepreneurship and public policy, having worked in over 45 countries.

Nadina Stodiek, Co-Head of Impact Management - Schroders. Nadina co-leads the firm’s impact management practice across listed and private markets, having spent six years at BlueOrchard developing its impact management and measurement framework.

Ben Constable-Maxwell, Head of Impact Investing - M&G Plc. Ben leads M&G’s impact investing strategy and is impact lead on several of its funds, having been central to the development of ESG integration within the firm’s investment processes.

Stephanie Dawoud, Head of Communications & Engagement - Impact Investing Institute. Stephanie leads the Institute’s external engagement and advocacy strategy, bringing over 15 years of experience in journalism and strategic communications across the UK, Europe and the Middle East.

Jonathan Chibafa, Founder & Chief Legal Officer - Forge ESG. Jonathan specialises in financial crime and supply chain risk management, working with carbon projects on governance and integrity and advising across jurisdictions in Europe, Africa, Asia and the Middle East.

 

 

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