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RESEARCH PRODUCT

Fuzzy Degree of Geographic Appropriateness for Social Impact Investing

subject

description

Impact investing is an investment practice that is characterized by the explicit intentionality of attaining a social impact and the requisite of report and measure this impact in a transparent way. The investment decision making process has two main stages. In the first stage, filters are applied regarding four critical issues: target geography, impact theme, asset class and target return category. In this phase, the set of possible investment alternatives are determined based on their appropriateness for impact investment in terms of those four essential aspects. In a second stage, efficient portfolios are obtained taking into account financial criteria (maximizing expected return, minimizing risk) and trying to maximize the social impact of the portfolio of investments. In this chapter, we will focus on the establishment of the target geography for the impact investment proposing a fuzzy indicator of the appropriateness of a geographic area in terms of impact investment. This indicator will be based on Soft Computing techniques which are an attractive tool given the imprecise, ambiguous and uncertain nature of data related to social impact investment.