There has been a long existing, alleged trade-off between return on investment and allocation of financial capital towards positive environmental and/or social impact. Investing doesn't need to be so one sided. The world witnesses do investors that are good, pursuing a strategy called Impact investing today.
According to the Global Impact Purchasing Network - a 501 organization dedicated to increasing the growth and efficiency of impact investing - impact investments are:
- Investments made into businesses, associations, and funds, with the aim to generate environmental and social impact alongside a monetary yield. Intentionality an investor's intention to create a positive social or environmental impact through his/her allocation of capital.
- Investment with yield anticipation. Impact investments are expected to create a return on capital, or, in minimum, a return of capital. The range of yield expectancy and asset classes target returns may vary from below marketplace, to risk-adjusted market rate, and might be made across asset categories, including, but not limited to money equivalents, fixed income, venture funds and private equity.
- Impact dimension. The investor's dedication report and to measure advancement of investments and the environmental and social performance. Investors, monetary advisors, and monetary institutions are continuously tossing around different language, effect investing, ESG investing and socially responsible investing are used synonymously, albeit this technical meaning are somewhat different.
ESG investing is this consideration of Environmental, Societal and governance factors in this fundamental portfolio construction process. SRI investment involves the negative screening of certain stocks, like the exception of investments in guns and tobacco. In contrast, impact investing is about intentionality investing in companies with the intention of engendering a positive social an\/or environmental impact on the world.
Despite varying degrees of impact, the attractiveness of an investment policy with this potential to affect social and social change has attracted a small, but passionate, ensemble of socially minded traders.
Impact investing has grown in size and popularity, bring a plethora of institutional and individual investors, including, but not exclusive to insurance agencies, family offices, pension funds, foundations and individual investors.
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