Do you ever think to yourself when you’re Investing. “What am I investing in? How is this company positively impacting the world around us?” Through Impact and Socially Responsible Investing, we can make a difference in the world we live in.
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We can place our money with numerous companies. We hope to make a financial gain. But what exactly are those companies doing for the greater good?
We can invest in real estate, stocks, bonds, cryptocurrencies, and various other investment vehicles. But how much do we know of what those companies do to help people or help the environment?
As investors, we take great pride in growing our portfolios and gaining wealth to hand down to our children and grandchildren. Leaving a legacy that our loved ones will remember. We can pass down our wealth to future generations. However, if we choose to become a more active impact investor, we can pass on a better world for all future generations to enjoy.
WHAT IS IMPACT INVESTING
Impact investing means that we, as investors, are deciding to allocate our money to companies, organizations, and funds that are committed to making a positive difference in the world.
Being an impact investor, you seek to find the companies that will return you a financial gain. All while returning positivity to humanity and the environment.
We can invest our money into companies that align with our core values as individuals.
How great would it be to invest in companies that return value to us while returning value to the world?
When we make investments, we can choose to invest in two ways: financial gain or impactful increase. Every decision we make can make a difference in how the future unfolds.
Politicians can write bills to make an impact for the greater good or to line their pockets. We can invest in changing the world for personal greed or the greater good.
FINANCIAL GAIN FIRST
The primary goal is financial gain.
You can invest for financial gain while still having a positive impact. Even though an investor is focused first on financial gain, they can still consider the impact of their investment on the world.
However, this method can also be done strictly on a for-profit basis, regardless of what the company invested in is doing to help or hurt the social or environmental resources of the world.
IMPACT INVESTING FIRST
The primary goal is to help social and environmental conditions – profiting comes second.
Social or environmental impact investing is front and center with this model. Investors are willing to take a potentially lesser return on their investment because of the impact the company creates for the goal that aligns with the investor’s vision.
SOCIALLY RESPONSIBLE INVESTING VS IMPACT INVESTING
While both forms of investment offer similarities, socially responsible and impact investing differ.
Socially responsible investing means investing your money with companies that try to do good while maintaining a profit. That may come in various forms, such as limiting their carbon footprint, reducing their environmental impact, or operating ethically. You can also be a socially responsible investor by simply avoiding companies that bend the rules, pollute the environment, or discriminate against people or groups.
Impact investors actively seek opportunities that align with their values and goals, investing in sectors such as renewable energy, sustainable agriculture, affordable housing, healthcare, education, clean technology, and social enterprises. By directing capital towards these areas, impact investors support innovative solutions that address social and environmental issues.
IMPACT INVESTING FIRMS
You may not be able to invest in these firms directly, but you can check out their websites for more information and gain ideas on who they’re investing in and how you can make a difference with your investments.
I’ve only listed two firms, but they will give you an idea of what to look for when choosing investments.
VITAL CAPITAL
Started in 2011, Vital Capital invests in sub-Saharan Africa’s low- and middle-income communities. This private equity fund seeks to assist these communities by increasing their access to healthcare, clean water, food, and housing, which are all scarce in the area.
The fund also looks to assist in producing ongoing opportunities for the community by investing in infrastructure, jobs, and community learning to become more self-sufficient once the operations are in place.
REINVESTMENT FUND
Located in Philadelphia, Pennsylvania, the Reinvestment Fund has over 800 investors. It has exceeded two-billion dollars in investments, and has helped over two million people in need. The fund invests in housing opportunities, infrastructure, healthcare, education, and clean energy.
IMPACT INVESTING ETFS
This list is just a few of many ETFs that offer an opportunity to invest sustainably. This list is not a recommendation to buy, and please do your due diligence before investing.
ISHARES MSCI KLD 400 SOCIAL ETF (DSI)
- Seeks to track the investment goals of US companies that have a positive social and environmental impact. Holdings consist of technology and consumer staple companies.
- Expense Ratio: .25% Learn more about DSI.
MSCI ACWI LOW CARBON TARGET ETF (CRBN)
- Maintain your global stock exposure while supporting companies that actively reduce their carbon footprint and dependence on fossil fuels.
- Expense Ratio: .20% Learn more about CRBN.
ISHARES MSCI GLOBAL SUSTAINABLE DEVELOPMENT GOALS ETF (SDG)
- Composed of positive impact companies that earn most of their revenues from products and services that focus on at least one major social or environmental problem as classified by the United Nations Sustainable Development Goals.
- Expense Ratio: .49% Learn more about SDG.
Final Thoughts:
Not all your investments need to be an impact investment or socially responsible. Though we should all strive to put our money to work for personal and global gain. If you start by simply removing one irresponsible company from your portfolio, you are beginning to make a difference.
Check out the Global Impact Investing Network (GIIN) to learn more.
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