In Plain Sight: Mechanisms of means–ends decoupling in impact investing

Impact investors are supposed to generate financial returns alongside social and environmental benefits. Increasingly, they must also measure these benefits as a form of performance management to provide robust evidence of impact. However, it is an “open secret” that because of inconsistencies and fragmentation in the applied means of impact measurement, ends are imperfectly met. In this article, we probe how and why means–ends decoupling occurs in impact investing in plain sight. We apply a qualitative and interpretative approach, drawing on 135 interviews and 102 documents gathered from impact investors. We find that impact measurement is not primarily used for performance management but plays a relational role between stakeholders. We uncover and conceptualize three mechanisms that drive decoupling between the ideal and actual functions of impact measurement, namely impact measurement as: (1) communication, (2) categorization, and (3) construction of the domain. We also find an important contingency: decoupling becomes more likely with increasing systemic opacity in an investment field. We outline contributions to the organizational decoupling literature and the sociology of quantification, and we show how the problems that arise from means-ends decoupling could be overcome.