What is Impact Investing
Impact investing is the next evolution in Responsible Investing. Responsible Investing has outperformed mainstream investing over the last decade, and a number of trends indicate that impact investing is fast becoming the model for doing business.
Macroeconomic conditions – including an increase in unpredictable global disasters, continued investment in unsustainable carbon production and depletion of available natural resources – forecast more volatile and less lucrative traditional markets. The adverse environmental and social by-products of traditional investments can also represent substantial and mis-priced market risks.
Investing without considering social and environmental impact is unsustainable. Economies cannot thrive if the resources essential to their growth – vital communities and a living environment – are treated as externalities.
The impact investment model understands that the economy, community and environment are interdependent. Social and environmental problems can be effectively addressed through capital markets, and making good money doesn’t have to come at the cost of social and environmental capital.
At the same time as traditional investment markets are being forced to innovate, technology is increasing the autonomy of citizens and investors. Easier access to information enables investors to consider more investment options, and make decisions that align investments with their values.
Investors can now choose managed assets that don’t just make money, but add value to the economy, environment and community — today, tomorrow and for the next generation. Impact investing is taking off.