As little as a decade ago, it was an unspoken truth in the finance industry that if you wanted to profit from investing, ultimately it would be the earth – or its people – that paid for it.
Most investment managers looked for growth in a world of finite resources. This usually meant financing fossil fuels, mining and other activities that are destroying the world. Meanwhile, the people this money belonged to – through their savings, pensions and investments – often had no idea what it was being used for.
Fast forward to 2023 and impact investing is turning this idea of targeting returns at the expense of all else on its head, and giving control to you – the investor – over exactly where your money is going.
It’s a way to consciously put your money to work tackling the world’s most pressing issues – and make a profit, too. Put simply, impact investing means investing to generate a positive, measurable social and/or environmental impact alongside a financial return. It’s a powerful means of pushing the spin of the earth in a better direction; in a world of rising temperatures, inequality, poverty, and rapid biodiversity loss, it’s what we desperately need.
And it’s zooming ahead in the popularity stakes. Excitingly, as more and more companies seek to solve the world’s most urgent problems, opportunities to invest in solutions – rather than the problems themselves – are growing at pace.
According to the Global Impact Investing Network (GIIN), the impact investing market is now worth a huge $1.164 trillion (£0.96 trillion).
With impact investing, the benefits to society or the environment are of equal importance to the returns generated. But it’s not an ‘either-or’ situation – you really can have both.
By backing businesses that can contribute to – and benefit from – important themes such as renewable energy, education, equality, affordable housing and clean transport, impact investing is ultimately an investment in the planet’s future as well as your own.
As global leaders gather for crucial COP28 climate talks, what better time to look at the impact your own investments are making. Our new Good Guide to Impact Investing, in partnership with Ethex and Energise Africa, will help you do just that.
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