Impact Investing

What is Impact Investing?

Impact Investing is executed with an objective to generate certain advantageous environmental or social effects along with financial gains. This investment type may take up the form of several asset classes and may also result in numerous results.

The point here is to use investment Capital and money for positive social results. Moreover, impact investing can be referred to as the investment strategy that not just generates returns, but also a constructive result.

This strategy seeks to leave a positive impact through investing. For instance, it could be non-profits that take advantages from the community and do something for the environment. Basically, impact investing attracts people and institutional investors, such as fund managers, pension funds, banks, private foundations, hedge fund, and more.

Types of Impact Investments

Impact investments can come in several different capital and investment forms. Similar to any other investment class type, this investment offers an extensive Range of possibilities as far as returns are concerned.

However, one of the essential things is that this investment provides financial returns and be in line with the conscience of the investor. Accordingly, most of the investors choosing this type have a goal to acquire Market-rate returns.

Also, the impact investment opportunities vary, and investors get to select whether they would like to invest their money in developing economies or emerging markets. Further, impact investments work in several industries, such as:

• Healthcare
• Education
• Energy
• Agriculture

How Does it Work?

It was in 2007 when this term was coined. However, the practice of impact investing was developed even before that. A fundamental objective of this investment is to decrease the negative impact of business activity on the environment.

That is the reasons why impact investing is regarded as a philanthropy extension. Investors using impact investing as the strategy consider the commitments of a company to Corporate Social Responsibility (CS).

Or, they have a sense of duty to serve the society positively before involving in the company. The impact that evolves from impact investing can vary according to the Industry and company within that industry.

But some of the common examples could be giving back to society by helping the underprivileged people or by investing in the practices of sustainable energy to save the planet. Also, institutional investors also create a bulk of this investment; however, a range of investor networks, web-based investment platforms, and socially conscious companies have started providing an opportunity to participate in impact investing.