Responsible investment will help to finance the social war against poverty and hunger, and environmental crisis’s, like, climate change. Globally, the challenges are so complex and intricate that the funding needed became so large that traditional sources of funding, for instance, philanthropy, are not sufficient anymore.
Experts say that this financial shortfall might be best addressed by “Impact Investment”. This is basically investments that benefit socially or environmentally, while still showing a profit.
Definition: This type of investment aims to generate specific effects that are beneficial to social or environmental issues, in addition, to still gain financially. In other words; investments that are socially responsible.
Break down: Basically, the goal of impact investing is in helping to reduce the negative influences that business activities have on the social environment. This investing can be seen as an extension of philanthropy.
How does it work: Impact Investments includes a lot of different types of investments vehicles as well as different types of capital. Investors will consider the commitment, social responsibility and the sense of duty that a company portrays before they will become involved.
Financial Benefits: Environmental and social, responsible, practices attracts impact investors. Committing to responsible social practices, companies can benefit financially, while the investors also show a profit.
Does “Impact Investing” have a future: This type of investing is largely appealing to the younger generation who want to benefit society. Through impact investment, entities or individuals make a statement of support for the company they are investing in. This trend is therefore likely to expand as the younger investors become more influential in this market.
The more people are realizing the financial and social benefits that come with impact investing, the more and more companies will also engage themselves in social responsibility.