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In cooking, you have to consider the balance between good taste and sensible nutrition. Fish and chips, for example, might taste delicious, but it's not the healthiest dinner to have every night. In impact investing, you have to weigh the balance between profit and impact. You want to see a return on your investment but you equally want to achieve your broader purpose.

Like cooking, when you invest, you never know exactly how it's going to turn out. The process can be very experimental. Sometimes you try things, and it works. Impact investors, from banks and pension funds to insurance companies and NGOs, have been increasingly interested in this agenda, but in the wake of Covid-19, the economy faces years of rebuilding. There's a risk that investors become less motivated by societal or environmental factors.

The reality is that Covid-19 has made the need for impact investing in certain sectors more severe and urgent than ever, with the Global Impact Investing Network highlighting priorities such as financial inclusion, food security, and health.

An obvious reason for investors to continue to focus on environmental and public good at this difficult time is that the climate crisis has not gone away.

Impact investing can:

• Mitigate risk (including environmental, societal, economic, and financial risks). For example, impact investors can divest in oil and gas which are likely to become stranded assets, and invest in clean energy and new technologies.
• Mobilise resources to where needs it the most. With more capital flowing in to solve social and environmental challenges, more talent may be attracted, and more favourable conditions are created to finding solutions.
• Motivate people. When people are working together towards a meaningful goal with the support of resources, innovation and breakthrough are more likely to happen, such as the development of a Covid-19 vaccine which is happening at an unprecedented speed.

Given the bulk of climate change emissions come from transport and energy, mechanisms to measure and monetise carbon emissions are key to driving investment. Investors will also want to take a holistic view of environmental impact. For instance, in a product's supply chain, improved manufacturing processes may produce less carbon, but if it has to be shipped thousands of miles, the savings might be cancelled out.

A key element of impact investing is the tension between the investor and investee, with competing expectations on profit and impact. My research in the sector shows that this tension is actually productive. Without it, there may be a lack of initial drive to break through and deliver the aims of both parties.

A final point to consider. It may be natural to think that impact investing is the responsibility of governments and big players in the finance market. Of course, there is a lot they can do with power in hand and asset under management. However, there is a move to democratise the impact investing sector. Take for example Tumelo, a Bristol-based startup which helps people see which companies they own through their pension and personal investments and enables them to take action. This trend can only accelerate as consumers demand that their retirement or rainy day funds do no harm.

Tackling the climate crisis will involve reallocating significant amounts of capital. Impact investing is an idea whose time has come.

Suwen Chen is a PhD candidate in Impact Investing at the University of Edinburgh Business School