If you’re millennial-minded and you’ve checked out robo-advisor services but you’ve never explored impact investing, I am happy to share that investors are utilizing the capital from impact investments to positively change the world — and it’s working. A recent Forbes’ article states that impact investing might be one of the most influential and important social innovations in our lifetime. Impact investing leverages passive power through capital markets for a higher purpose that goes beyond the scope of maximizing shareholder returns.
What Is Impact Investing?Impact investing is a way to invest in organizations that promote a greater good. The “impact” can be measured over time. This might be through environmental, social or corporate leadership changes. Impact investments can be found in developed and emerging markets. Impact investment goals include:
- Cleaner water (e.g., purify water used to drink/cook/bathe easily and affordably)
- Improved gender diversity (e.g., policies/processes that improve the workplace for all employees that can improve employee retention and diversity)
- Health and wellness (e.g. building products that measure movement/exercise)
- Ocean health (e.g., the creation of fishing nets that dissolve in saltwater and save many ocean animals)
- Carbon reduction (e.g., products that use sun for lighting, cooking, heating/cooling and transportation)
What Is an Impact Company and How Does It Function?
- It intentionally promotes social and positive change, and is committed to measuring the environmental or social progress of their investments over time.
- It focuses on generating positive financial returns.
- It can have returns across asset classes, including fixed income, cash, venture capital and private equity.