What is Impact Investing?
Impact investing refers to investments that generate financial and social impact. Impact investors want to help resolve the world’s greatest problems through investment dollar decisions. The impact is a positive social or environmental outcome. An example would be investing in a for-profit company whose revenues help provide clean water for people in Africa affected by the lack of safe water or investing in an ESOP (employee stock ownership plan) where part of your portfolio is invested in the company you work for – This can help you save for retirement, while enabling your company to make investments in things that support community charitable causes. Both of these examples have the aim of helping society while also making money.
Impact investing is the process of making a positive social or environmental impact, while also achieving financial investment returns. Impact investing is not a charity or investments with no return. Impact investors expect some return on invested capital, and rate that return based on their ability to meet the impact goal. The returns are therefore based on both financial value and social value, which are determined by the investment’s strategic focus and its relative contribution to change in the world at large.
Impact investing is not a charity or investments with no return. Impact investors expect some return on invested capital, and rate that return based on their ability to meet the impact goal. The returns are therefore based on both financial value and social value, which are determined by the investment’s strategic focus and its relative contribution to change in the world at large.
Impact investors want to help resolve the world’s greatest problems through investment dollar decisions. The impact is a positive social or environmental outcome. An example would be investing in a for-profit company whose revenues help provide clean water for people in Africa affected by the lack of safe water or investing in an ESOP (employee stock ownership plan) where part of your portfolio is invested in the company you work for – This can help you save for retirement, while enabling your company to make investments in things that support community charitable causes. Both of these examples have the aim of helping society while also making money.
Categories of Impact Investments
A socially sustainable investment is one that helps create a more socially just world. The most common example of this is investing in a business that offers greater equality of opportunity and benefits those who have less resources or opportunities. Companies that help provide clean drinking water and sanitation are good examples of this. Other examples include investments in micro lending, real estate, venture capitalism and social businesses.
An environmentally sustainable investment is one that helps protect the earth or environment. This can mean purchasing stocks from companies that fund renewable energy or environmentally safe technologies or investing in community gardens, organic farms, wildlife conservation, recycling companies and non-forest products businesses. This is also a good way to help protect our planet as these companies are better for the environment, provide jobs and benefit society through the products or services they provide. The most common example of this is investing in green technology that furthers the clean energy revolution or investing in renewable energy companies.
Impact investing is a different way of thinking about investing, one that focuses on creating social value and sometimes making money because it will help advance the world’s most important issues. There are three main categories for impact investment: socially sustainable investing, environmentally sustainable investing and socially responsible investing. Impact investors want to help resolve the world’s greatest problems through investment dollar decisions. The impact is a positive social or environmental outcome. An example would be investing in a for-profit company whose revenues help provide clean water for people in Africa affected by the lack of safe water or investing in an ESOP (employee stock ownership plan) where part of your portfolio is invested in the company you work for – This can help you save for retirement, while enabling your company to make investments in things that support community charitable causes. Both of these examples have the aim of helping society while also making money.
