The goal of this investment strategy is to generate financial returns while advocating for the social and environmental issues you care about – while ensuring that your money doesn’t support anything that goes against your beliefs.
Impact investing offers a refreshing sense of agency at a time when major global challenges – climate change and housing affordability, to call just two – seem insurmountable. Not surprisingly, impact investing is especially popular with Generation Z and Millennials, who’ve inherited these and other issues which have arisen over many years.
In this column, I’ll explain the best way to discover profitable and impactful investment opportunities and customary pitfalls to avoid. You’ll also learn practical steps to jump-start your impact investing journey, and I’ll offer you resources that may allow you to align your financial decisions along with your values. Read on to find out how you possibly can make a difference with money.
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What is Impact Investing?
Impact investing refers to investing in projects or corporations which have a positive social or environmental impact while also generating financial returns. As Joseph Curry, certified financial planner and CEO of Retirement planning simplified in Peterborough explains: “Investing is about using your money in such a way that you can participate in the future cash flows of these investments and continue to advance financially.” Impact investing includes this concept – being profitable – but additionally brings it into play along with your values Unison, within the hope that your money can have an effect beyond simply generating financial returns.”
The Canadian impact investing landscape has grown significantly in recent times. According to the Responsible Investment Association (RIA)The impact investing market grew to an estimated $20.3 billion by the tip of 2019, up nearly 50% from the $14.8 billion estimate in 2017 – and nearly five times the estimate $4.1 billion in 2013.
Younger generations are behind the boom – nationwide and across North America. According to research by the Charity Fidelity40% of Millennials say they engage in impact investing, in comparison with just 20% of Baby Boomers.
Impact investments are profitable on a worldwide level. The Global Impact Investing Network 2020 survey found that over 88% of impact investors reported that their investments met or exceeded their financial expectations.
Examples of impact investing
One of probably the most well-known examples of an impact investor is the Bill & Melinda Gates Foundationfounded by technology entrepreneur Bill Gates. With a formidable endowment of $67 million (all figures in US dollars), the muse is committed to philanthropy and has a strategic investment fund. This fund manages $2.5 billion and invests in initiatives that further the muse’s mission to enhance health, education and gender equality. The fund selects organizations and projects that profit the world’s most vulnerable people, who are sometimes ignored by traditional investors.
