Investing continues to evolve. With newer investment products, comes newer governmental regulations and with newer regulations, comes newer financial planning techniques.
One newer investment approach has been put at the forefront of the investment management industry today — impact investing. The term can originally be traced back to 2007 at the Rockefeller Centre in Italy, where practitioners gathered to define a new investing approach that would generate more than a financial return.
Since then, international organizations, governmental entities and financial institutions have shifted their attention to the notion that general investments like stocks and bonds could be used to better the world.
Originally, bettering the world through “investments” or donations rather, was just referred to as philanthropy. Over the last decade, however, the concept of social impact grew larger than just philanthropy which was only exclusive to the 1% of the global population.
The idea towards social impact and sustainability grew larger and the attention shifted to being inclusive of the general population.
How Impact Investing Has Evolved
Here are some notable events of how impact investing has grown and evolved since that pivotal gathering occurred in 2007.
Following that meeting in Italy, newer investing vehicles were introduced and with that, NGOs and governmental bodies began to pay serious attention allowing for policy decisions to arise to guide impact investing’s growth.
For any new approach to be successful on a global level, there must be two factors driving them:
- Demographic shifts.
- Policy initiatives.
Sustainable investing has accomplished both factors with millennials driving the shift.
Every generation has a cause. For millennials, aligning their values with their work and overall careers is an important feeling and one that drives them. As this generation grows, they are ensuring that their careers have stronger correlations in making the world a better place.
As a result, this is affecting their attitudes toward personal finances.
1. Demographic Shifts
This shift began with a striking survey, put together by the World Economic Forum in 2013 where 5,000 millennials surveyed in 18 different countries noted that the overall top priority for any business should be “to improve society.”
Not only has a demographic shift occurred affecting the demand for socially responsible investing, but also a shift in a very important aspect — generational attitude.
The attitude that their earnings, savings and overall personal finances could be geared towards tackling societal issues like world hunger and climate action, is a top concern for this generation given long-term trends.
2. Policy Initiatives
With strong demand, comes strong supply and combining these two with a positive trend all make the conditions ripe for newer policy initiatives.
Investing overall was reserved to the very few who had to commit a certain balance to be invested. The 2012 passage of the JOBS (or, Jumpstart Our Business Startups) Act by then-US President Barack Obama eased securities regulations which essentially opened the floodgates when it comes to investing without a minimum commitment to invest.
On the global front, impact investing gained a major enforcer — the United Nations.
The 2030 Agenda
In September 2015, the United Nations adopted the 17 sustainable development goals for the world to meet by 2030. To achieve the 17 overarching goals, 136 individual targets must be met.
Beyond the significance of having 193 nations agreeing to the same agenda, is the now strengthened effort and coordination among various entities collaborating with one another. Entities that include non-profits, governments and corporations and NGOs.
Impact investing now has a guideline.
It’s a New Day
This investing approach is poised to continue growing heading into the next decade backed by a newer generation of investors and backers that include the United Nations as well as the World Economic Forum.
Rather than focusing on single impact investments to include in a general investing portfolio, Newday Impact Investing is focused on holistic sustainable investment portfolios with underlying impact investments.
Here is how Newday’s portfolios are aligned with the UN Sustainable Development Agenda:
- Gender Equality → UN Goal #5
- Climate Action → UN Goal #13
- Fresh Water → UN Goal #6
- Ocean Health → UN Goal #14
- Animal Welfare → UN Goal #15
Newday’s Global Impact portfolio additionally includes diverse organizations working simultaneously to tackle one or more social and environmental challenges defined by the United Nations 2030 Agenda.
With a $5 investing minimum, anyone can begin to invest and create portfolios toward causes that matter the most to them.