The risk-adjusted market rate is the return one would expect to earn on an investment or set of investments given the level of risk if one were agnostic to impact. It measures how much return an investor demands per unit of risk, enabling more efficient evaluations of whether, given the risk profile, an impact-first investment is sacrificing financial gain. Most equity or equity-like investments use a long-term rate of return of around 7% as a common benchmark. Some investments—including some impact investments—aim for and achieve risk-adjusted market-rate returns. Others—particularly impact-first investments—may intentionally accept below-market returns to prioritize social or environmental outcomes. Understanding this trade-off helps investors align financial expectations with mission goals.
