From social issues to environmental concerns and beyond, people have never been more passionate and vocal about making meaningful changes in the world. Yet aside from entering the political sphere, making any sort of impactful change is difficult, to say the least.
That is, until impact investing came around. This method of taking action, separate from political action, allows any individual to voice their concerns through specific investments. By consciously choosing what to invest in and why, millions of investors the world over are starting to drive meaningful change — all while investing in their future.
Yet what is impact investing, and how can you drive meaningful change with your money?
What is impact investing?
According to the Global Impact Investing Network (GIIN), impact investments are “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” They often provide capital to companies that work to solve larger social and/or environmental issues.
GIIN’s four Core Characteristics defining impact investing are:
Intention: The investor’s intent to contribute to a measurable social or environmental impact. According to GIIN, this is at the heart of what differentiates impact investing from other investment approaches.
Use evidence and impact data in investment design: There should be data around the investment designed to show the investor’s impact on the social or environmental issue being addressed.
Manage impact performance: The performance of each investment should be communicated and shared with investors as it relates to the larger impact goal of that investment.
Contribute to the growth of the industry: These investments will use shared industry terms and indicators to describe their impact strategies. Investors and companies will also share findings where possible to advance their larger social impact goals.
Unlike charitable giving, which sees no monetary gain, impact investors can see returns from their investments. Like any investment, impact investments are securities, albeit ones involved in making conscious change, and can increase or decrease in price based on market conditions. Though investors put money into impact companies/causes for material gain, they do so with the hopes of making meaningful change in the process.
Who can impact invest?
Retail investors — non-institutional investors like you and I — can leverage individual purchasing power to invest in products and companies that add a positive social value. Simply put, retail impact investing offers an opportunity for anyone to express their values with each investment.
Institutional investors — pension funds, mutual funds, VCs, investment banks, commercial trusts — often invest other people’s money. They can opt to use their assets under management to make large-scale impact investments.
Though these investors take different investment approaches, they both have a tremendous ability to unleash capital for social good. This is especially true of individual investors, who funded impact-focused startups like Zipcar and Honest Tea in their early stages. According to the Rockefeller Foundation, individual retail investors are projected to have $100 trillion in investing power globally by 2020.
Impact investing on Republic
There are many opportunities to be an impact investor on Republic. We made it simple for individual investors to support companies that address impact issues by highlighting them throughout our site. The Social Impact tag, along with other impact-related tags, can be found on impact-focused companies and campaigns throughout the Republic site.
Be sure to browse the active campaigns on Republic and use the four Core Competencies to determine if your investment can be leveraged for social good.
Impact investing is a great way to have a positive return for your portfolio and for society at large. If impact investing is something that speaks to your values and interests, browse the campaigns on Republic and consider investing in a company that you truly believe can change the world.
This educational article is provided by Republic to help its users understand this area of the market, it should not be construed as investment advice as it is impersonal, disinterested and was produced by Republic for Republic’s users, without remuneration received or expected.