This publication is a sequel to the OECD 2015 report on social impact investment (SII), Building the Evidence Base, which set out a distinct typology and framework for social impact investing to differentiate between SII and conventional investments, particularly in terms of explicit and measurable impact goals.

Social impact investment markets are growing in all continents across the globe, both in OECD member and developing countries. Pay-for-success instruments such as Social and Development Impact Bonds (SIBs and DIBs) are increasingly being applied, while other innovative models are being tested, such as Social Impact Incentives, which directly reward enterprises with premium payments for achieving social results.

The 2030 Agenda calls for the most ambitious financing strategy for sustainable development yet, with a dual challenge of mobilising unprecedented volumes of resources, and leaving no one behind. Beyond public resources, private, domestic and international sources of finance are increasingly also needed. This includes taxes, private investment, philanthropy and remittances. As the paradigm of development co-operation is changing, new models are emerging in sustainable development finance.

A follow-up to the 2015 OECD Social Impact Investment (SII) report, this publication brings new evidence on the role of SII in financing sustainable development. It depicts the state of play of SII approaches globally, comparing regional trends, and assesses its prospects, with a special focus on data issues and recent policy developments. It provides new guidance for policy makers and providers of development co-operation to maximise the contribution of impact investing to delivering the 2030 Agenda, the Paris Agreement as well as the Addis Ababa Action Agenda. To that end, it calls for an “impact imperative” in financing for sustainable development in terms of: ensuring financing is going where it is needed most; applying innovative new approaches to solving the Sustainable Development Goals; addressing data and measurement challenges; and evaluating the ex post social, environmental and economic results of public initaitives.

The paradigm for financing sustainable development has shifted. Engaging with the private sector and mobilising private finance will be critical to achieving the Sustainable Development Goals (SDGs). Time is running out to achieve the SDGs and it is incumbent upon all actors in sustainable development finance and the private sector more broadly to act now. This chapter makes the case for private sector financing, including social impact investment, as an effective tool to contribute to delivering the SDGs. It explores the current trends of increasing private sector interest in financing for sustainable development impact as well as the growing use of private sector instruments and approaches by both public and private players.

The 2015 publication Social Impact Investment: Building the Evidence Base, presented the OECD Social Impact Investment Market Framework, an important analytical tool for analysing the social impact investment markets. The framework outlined the ecosystem of investors (supply side), investees (demand side) and intermediaries. It also highlighted that social impact investment should start with the social need being addressed and noted the critical role that the enabling environment of a country can play. This chapter sets an updated framework and contextualises it with examples.

The social impact investment market is growing rapidly across the world in both developed and particularly in developing countries. This chapter highlights the main developments and trends in the market, including data from existing market surveys and other sources. It also provides an overview of the types of financing instruments being used in the market as well as emerging pay-for-success models. It also highlights emerging trends such as the important role technology is playing in the market as well as the growth of gender lens investing.

Global and regional studies indicate that social impact investment (SII) markets are growing across the globe. This chapter explores how social impact investment is developing in key regions around the world. For each region, the chapter reviews the current state of the SII market and the main opportunities and bottlenecks for social impact investment. While not exhaustive, the following regions are examined: sub-Saharan Africa, the Middle East and North Africa, Latin America, Asia, North America, and Europe.

This chapter introduces the OECD Policy Framework for Social Impact Investment, which is used to map existing public initiatives in support of impact investing, both in the domestic market and in development co-operation. It thereby aims at helping governments understand what levers they can use to facilitate the growth of the social impact investment market. The first section presents the theoretical underpinnings of the OECD Policy Framework for Social Impact Investment, while the following ones describe the policy initiatives implemented by international organisations and by national authorities, within domestic borders and in the realm of development co-operation.

A number of established data-collection initiatives and organisations provide helpful insights on the social impact investment market. However, data efforts are still highly fragmented and not comparable across studies. This chapter presents data and transparency efforts undertaken alongside the OECD Social Impact Investment Initiative’s data work stream. The chapter outlines initial steps towards a global data framework on social impact investing. It starts by presenting transparency principles. It then discusses data on transactions and performance, also looking at data available beyond social impact investment that could inform help inform the SII market. The chapter also presents social impact investment platform efforts and approaches for measuring impact. It concludes by calling for greater coordination and Social Impact Investment laying out recommended steps to move forward from the initial data standards to internationally adapted and globally used data standards.