Impact investing is gaining traction quickly and the term is still being defined. The idea, however, comes down to the marriage of measurable positive (social and/or environmental) impact, together with, financial returns. It can, therefore, be a highly effective tool in addressing social and/or environmental challenges, while generating financial returns at the same time. It is a win-win proposition for both investor and society, where the investor can either be a private individual an institution, government or charity. The Global Impact Investing Network (GIIN) also publishes their definition of impact investing and have defined it as follows:
”Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.”.
Impact investing can, therefore, be seen as a form of socially responsible investing and as a guide for various investment strategies. Impact investments are made into companies (for or non-profit), organisations and funds, with the intention to generate measurable social and/or environmental impact together with a financial return.
Impact investing can target both emerging and developed markets, and chase a range of returns from below market to above market rates, depending upon a variety of circumstances. Impact Investing tends to have roots in either social issues and/or environmental issues but the spectrum is rapidly expanding. Impact investors actively seek to place capital in businesses, nonprofits and funds that can harness the positive power of enterprise and occurs across various asset classes, including private equity/venture capital, debt, and fixed income. Watch the quick and catchy video below followed by a boarder explanation from Anthony Bugg-Levine and Ted Emerson into impact investing.
Watch the quick and catchy video below by a broader explanation from Anthony Bugg-Levine and Ted Emerson into impact investing.