Impact investing is not a niche strategy. It is an investment approach that combines financial returns with measurable social and environmental impact. Alongside risk and return, a third dimension matters: impact. Capital is directed towards solutions to the defining challenges of our time — from energy, infrastructure, and climate to health, education, and social inclusion. The approach is closely aligned with the United Nations Sustainable Development Goals (SDGs).

BVII defines Impact Investing through five core principles:

1. Financial return. Impact investments combine measurable impact with financial viability, ranging from market-rate to concessional returns.
2. Intentionality. Each investment pursues a clear and intentional impact objective, grounded in a defined Theory of Change.
3. Impact Measurement and Management (IMM). Impact is systematically measured, managed, and transparently reported.
4. Asset Contribution. The investment itself contributes directly and measurably to solving social or environmental challenges.
5. Investor Contribution. Investors actively contribute to achieving impact beyond the provision of capital alone.

The detailed definition of impact investing in alternative investments was jointly developed by the Bundesverband Impact Investing (BVII) and the Bundesverband Alternative Investments (BAI) and published in the paper Impact Investing in Alternative Investments.