Impact investors are increasingly challenged to prove how their capital contributes uniquely to positive societal or environmental outcomes beyond traditional market investments. To address this need, investment expert Michael Brown has proposed a new framework centered on the concept of ‘additionality.’
The framework outlines three distinct pathways through which investors can demonstrate additionality:
1. **Innovation** – Funding initiatives that are novel or not yet proven in the mainstream market.
2. **Scaling** – Helping to expand existing impactful solutions to reach broader audiences or geographies.
3. **Engagement** – Using investor influence to improve practices and outcomes among investee organizations.
By focusing on these pathways, the framework aims to support more transparent and accountable impact investing practices. Brown argues that articulating how capital contributes in these ways will strengthen both investor confidence and social impact outcomes.
The approach seeks to differentiate genuine impact investment from conventional capital deployment, encouraging a more disciplined reflection on the value investors add. The framework arrives at a time when calls for greater rigor and evidence in the impact investing community are growing stronger, highlighting the need for robust tools to guide and measure real-world change driven by financial commitments.
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