For many individuals, financial investing and philanthropy aren’t often placed in the same category; however, more shareholders are turning to a new method of investing that merges values and promising financial returns together.
Impact investing, otherwise known as ESG (environmental, social and corporate governance) investing, is the act of making investments into companies, organizations, and funds with the intention of producing a positive social or environmental impact alongside a financial return. This form of socially responsible investing serves as a guide for various investment strategies. Simply put, impact investing is about identifying a meaning behind your money.
Earlier this month, a company called ImpactAssets launched two new products with the idea of impact investing in mind. According to the company, the Microfinance Plus Note and the Global Sustainable Agriculture Note were developed to offer minimal interest rates and provide a strong liquidity feature and are available to end-investors with a minimum investment of $25,000.
The Microfinance Plus Note allows ImpactAssets to lend to regulated emerging market organizations that generate small business loans, while the Agriculture Note is designed to encourage sustainable farming cooperatives that help farmers around the world stabilize their profits and farm productively.
These two products are just some of the examples of the blooming impact investing options for end-investors, many of whom anticipate their investment dollars to closely match their personal values and also wish to see the value of their investments expand.
The Enticement of Impact Investing
Impact investing challenges the long-held beliefs that social and environmental issues should only be addressed by philanthropic organizations, and that market investments should focus entirely on delivering the highest of financial returns.
What makes impact investments so appealing to advisors and investors alike is that they do not focus primarily on philanthropy, but rather an alternative investment with a socially and economically beneficial twist. While many advisors are skeptical of the success of such investments, the truth of the matter is that more and more brokerages are getting into impact investing. Firms are experiencing a demand from more of their clients to create products that generate a positive impact and advisors are losing assets to larger firms.
To learn more about impact investing and how to incorporate strategies into your investment opportunities, contact us today.
Stay tuned for part two on how impact investing is changing the way millennials spend their dollars and prepare for retirement.