Impact investing is wonderful for those who want to put their money to work for them but in a meaningful, impactful way.
Impact investing is making investments with the intention of generating positive and measurable environmental and social impact in tandem with a financial return. Many of those interested in impact investing invest their money into causes, movements, and organizations they believe in and think deserve some financial support.
In this article Anne and Carl Deane will explore what impact investing is and the different ways it can be done.
Impact Investing Benefits
Impact investing is very similar to regular investing, but it also comes with the benefit of bolstering positive environmental and social impact. Those who practice impact investing not only focus on the smartest ways to invest their money for a significant financial return, but also on company mission statements and overall commitments.
When investors practice impact investing, the first priority is to research what they’ll be investing into. By analyzing not only company stock stats but also what the company itself believes in and works for, an impact investor makes their investment decisions. Many have reported that after impact investing, more than 88% of investors have seen their expectations be exceeded.
There are generally two approaches when impact investing. One approach is referred to as socially responsible (SRI) and the other is referred to as environmental, social and governance (ESG) impact investing. The two approaches differ in that one only considers social change, while the other encompasses multiple large ideas that focus on aiding the world.
When impact investing, investors take into consideration a company’s main purpose and drive for creating their products or providing their services. The more transparent a company is about their mission statement and beliefs about the world, the more likely it is that they will receive impact investments.
How To Begin Impact Investing
To begin impact investing, the first thing every investor should do is research the companies they’re interested and look for company visions and mission statements that are included on websites, or the annual report or in Chairman letters to shareholders. These views can also sometimes be found in publications such as articles and magazines, even blog posts.
The key during this process of researching who to invest in is to ensure the company is also in alignment with their own personal core beliefs and values. Once an investor has found some companies they’re interested in, they should immediately invest and expect their financial returns.
It’s recommended that those new to impact investing start small and start as soon as possible, as this is the easiest way to get started in the practice. After investing in a few different companies that share their beliefs, they’ll quickly be on their way to perfecting the art of impact investment.
Summary
Impact investment is just a professional term for investing in different companies according to personal beliefs and to bring about positive social, environmental, or governmental impact.
To successfully begin impact investing, investors should focus on which companies share the most similar beliefs to theirs and are acting in ways that the investor believes is positive for the community.
