Why Impact-Investing?

Despite the fact that the terminology of Impact Investing defined its contours only in the last 15 years, the idea of what it represents is much older than that.

What do we mean with Impact Investing today? An investment strategy that does not limit itself to financial profit but aims to generate a positive impact on the environmental and social field. The use of financial capital aims to translate into better environment and quality of life for the people directly involved and the society as a whole. The Impact Investor’s approach of social responsibility as an important value for the conceptualization of an investment, at the same time, when we speak of impact investment we are not talking about philanthropy, (although it can be part of it). Profit remains an important part of this strategy. According to the Global Impact Investing Network 88% of the impact investments met or exceeded their expectations of profit. What is also very significant is what is shown from a study by the University of California; the median return rate of impact investments is 6.4% compared with a 7.4% return for non-impact investment funds. This -1% financial profit on the investment can have a magnified profit on environmental and social issues.

Make an Impact

Starting from the premise of this win-win situation between investors and society it is not surprising that the majority of the funds for this kind of investments come from institutional investors like Governments, Hedge Funds, Pension Funds, Banks, Private Foundations. At the same time, it is important to emphasize the crescent role of private investors in the sector. The raised social consciousness and web-based investment platforms have expanded the borders and the accessibility for Impact Investing.

The increase of financial flow destined for Impact Investing, stimulates new business ideas and emerging markets. Some of the industries that attract most of these funds are the ones that have a close touch with the present and future wellbeing of our society and of our planet. Fields like education, healthcare, sustainable agriculture, clean and renewable energy are the most attractive for Impact Investing. A raised social consciousness around the environmental and social problems that these investment target, will lead the beneficiary-customer more and more toward services offered by these companies. A good conscience is priceless, or almost…

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