Impact investing — which consists of investment strategies that focus on the intent behind each move — provides a way to think about the allocation of funds. Impact investing is especially relevant when focusing on areas and sectors such as life sciences, energy, climate science, technology, manufacturing, and the social space.
Some leaders view impact investing and other efforts focused on diversity, equity, inclusion, and belonging (DEIB) as purely charitable ways to use business. However, there are other ways to look at them. Applying impact investing principles to your family office's investment strategy can represent a powerful financial advantage when you take an expert-guided approach.
Read more: Learn how MIT Sloan Executive Education faculty view the business landscape in 2025.
What is impact investing and how does it perform in the market?
Not everyone defines impact investing the same way. In some cases, it means ESG investing, directing investments to achieve specific environmental, social, and governance (ESG) factors. In other cases, people use the term to refer to responsible investing, allocating investment capital to target more general societal causes and aims. What unifies all the definitions is the use of extra signals — impact investing means considering extra data points.
It's important to recognize that the daily practices and investment decision-making methods within your impact strategy will vary based on the specific field you're targeting and your impact goals.
Given the vast differences between the relevant industries and sectors, it's clear that there is no universal, silver-bullet approach to impact investment decision-making. Fields of interest include:
- Life sciences and healthcare
- Energy and fuels
- Climate science
- Manufacturing and logistics
- Social organizations
Building a legacy and maintaining a sound financial position
The curriculum for MIT Sloan Executive Education's course Impact Investing for Family Offices applies systems thinking to the overall question of what impact investing means to specific offices and what it can accomplish. One of the key concepts underlying this course is the idea that impact investing can deliver worthwhile financial performance while simultaneously conveying other value.
What form does that value take? It can come as a legacy for the family office. Since family offices are by nature tied to specific groups of investors, it can be important for those individuals to define their values. Did you have a positive social impact? Did you prioritize social development?
When people think about your family's name in years and decades to come, your investment decisions can shape that perception. Applying impact investment is a way to actively shape that perception while also making strong fundamental economic decisions, ensuring the next generation of your family will see competitive financial returns.
See more: Hear MIT Sloan Executive Education Lecturer Malia Lazu give an advanced overview of embracing DEIB for business advantage.
How can you apply impact investing to your family office's strategy?
Creating an advanced impact investing strategy for your family office involves unifying multiple concepts. It requires balancing impact goals — such as offsetting climate change or promoting social good — while also achieving a strong financial return. A solid analytical framework will help you bring these ideas together, adding a positive impact to the principles of traditional investing.
Once you see all the inputs and interconnected forces side by side, it's possible to see that values-focused investing is not actually separate from profitability. The business landscape is one contiguous space where climate change and social justice exist as data points that drive profit and loss and factoring them in doesn't mean abandoning competitive financial returns.
This connectivity echoes concepts explored by MIT Sloan Education Lecturer Malia Lazu, who teaches the course Intention to Impact: How to Lead in a Multicultural Economy. She notes that it's common for business leaders to see calculations involving DEIB as "charity." Taking such a limited view can harm companies' ability to improve their performance.
Lazu cited McKinsey & Company's recurring diversity report series. The latest edition finds that the most diverse quartile of companies has a 39% chance of outperforming bottom-quartile competitors. This hard economic data is an important data point, especially in a business climate dealing with the headwinds of anti-DEIB messaging.
Data should guide investing strategies
As with any kind of investing, impact investing works best when your office has access to up-to-date industry signals. Your family office should run an active strategy rather than being overly passive. Reacting to the latest signals will help you stay current as an impact investor. The business landscape is constantly changing and DEIB/ESG signals are part of that change.
While the exact form of your family office's responsible investing strategy will change over time, having solid principles underneath can serve it well. The combination of these legacy-building investment goals with real-time data analysis can yield a flexible, value-generating strategy.
What's the value of executive education around impact investing?
Due to the potential importance of impact investing on the long-term future of your family office, it can be worthwhile to study the subject in depth. This is where MIT Sloan Executive Education can shape your thinking. The wide network of thought leaders available to you ensures you have all the facts required to become a shrewd impact investor, studying and reacting to signals.
The Impact Investing for Family Offices course consists of two days of in-person sessions, with each focused on one side of values-based decision-making. First, participants study an adaptable assessment framework that can be applied to all types of investments. Then, on the second day, the class learns about current trends sector by sector, covering life sciences and healthcare, energy transition and climate change, manufacturing, and social impact.
Networking with industry insiders in those fields, as well as expert faculty and peers from the family office world, provides participants with a glimpse of the potential depth of impact investment. Viewing the ability of impact investment to transform the way your office allocates funds can shape your approach for years to come.
If you manage a portfolio within your family office or you're a ranking executive within a family business, this type of executive education is relevant to your role. It's also worthwhile if you're an institutional investor or serve with an endowment or foundation. The main requirements include having investment capital and a desire to allocate that money toward a specific goal.
Read more: Learn why MIT Sloan Executive Education's courses are the best-positioned to impart vital information about the state of investment opportunities.
Learn to embrace impact investing in your office
Impact investing gives your portfolio an identity to go along with its performance. This is an important consideration for your work over the long term and is something worth learning about in detail. Taking these lessons directly from industry experts and knowledgeable peers is the reason to seek out top executive education programs.
There's no need to enter into this process alone. In fact, MIT Sloan Executive Education encourages groups from the same family office to enroll in courses together, ensuring the lessons are spread throughout the organization. Asset managers and fund managers can learn to become impact investors in a mutually supportive environment.
When all leaders within a family office are willing to commit to an impact investment strategy and align around their goals, there's potential to rethink the office's direction. It's important to remember the assessment frameworks are meant to be used consistently over time. Rather than a one-time strategy shift, impact investment is a philosophy that will evolve along with your office.
Enroll in Impact Investing for Family Offices to explore all the possibilities and put this powerful new concept in your tool kit, allowing you to blend social benefit with an impressive financial return.