What is Impact Investing?

The following is adapted from The Good Your Money Can Do by Eva Yazhari.

“Why would you want to take this investment out of your portfolio?”

My investment advisor was all smiles. We were sitting across from each other in a beautiful conference room overlooking Lake Zurich in the sophisticated Swiss banking city. It was the fall of 2011. For months, I had been telling him that I wanted my investments to align more with my values, explaining that much of the rest of my life was already in alignment. But he was not getting the message.

I tried again. “I do not want to own part of a large tobacco company. It is not what I consider a life-affirming investment. There are plenty of other opportunities to make money.”

He politely waved me off, laying his best investor-speak on my husband and me.

“But this is a good debt investment for you, and it fits into your portfolio return mandate,” he said.

I wanted to object again, but I could already tell he would not listen. Soon, the meeting was over, and we had politely talked about my life savings as if they belonged to a person with different values than my own. Walking out of the office, I felt as if I had been shamed for demanding more from my money, for wanting to live by my values, and for questioning the judgment of an experienced wealth advisor.

That night, something struck me: I was frustrated that this smart, well-known advisor at a reputable Swiss bank did not understand what I was driving toward. However, I also knew that he was not the exception but rather the norm. Despite the fact that impact investing comprises more than a quarter of all investing, most people still did not know what it was or how to practice it, and many groups that focus on educating investors target large wealth holders, which most of us are not.

My mind flashed back to a presentation I had given several months before at a conference in Brussels. I was speaking to an audience of about fifty, all of whom were highly successful French and Belgian businesspeople. Confidently, I had launched into my presentation, but within moments, an audience member raised his hand.

“Excuse me, but what exactly is impact investing?”

Others chimed in. Within moments, it was clear that not a single person in the room had any idea what I was talking about. So, for the rest of the presentation, I walked them through it. It was not the talk I had planned, but for them, it was a revelation. Afterward, it was like a switch had been flipped in their heads. These professionals had never heard of impact investing until that day. But now that they had, they were all fascinated by the concept and the ability to think differently about their money.

The more I got to thinking, the more I realized that impact investing, while a growing and increasingly valued practice, had an awareness deficit. Most people I know would love to leverage their money toward a cause that is important to them, but outside of philanthropy, they are not aware that such opportunities exist.

Perhaps this describes you as well. Like my audience in Brussels, you are interested in using your money to make a difference, but you are not sure how. Or, like my investment advisor, you have heard of impact investing, but until now you have not taken it seriously. Or, you are neither, and you just like the idea of using your money to do good.

Whatever the case, impact investing can create value in your life — and make a tremendous difference for others and the planet.

Using Your Money For Good

Most of us are taught that there are only three ways we can use our money: save it, invest it, or spend it. Each is important in its own right, but there is another way you can utilize your resources. You can use it to make a change.

Impact investing is a means for creating a positive impact. Specifically, impact investing is the process of investing with the intent of creating positive change — be it social, technological, or environmental — all while earning a financial return. It is a way to look beyond your money to help find meaning and purpose in your life and the issues you care about. It is a way to be proud of how you invest your money — and to inspire others to do the same.

Equally important to what impact investing can do for others is what impact investing can do for you. It feels wonderful to do good. Impact investing gives focus to our inherent desire to make the world a better place. And in so doing, it creates an upward spiral of pride and accomplishment in our lives.

For more advice on impact investing, you can find The Good Your Money Can Do on Amazon.

Eva Yazhari is a seasoned investor, entrepreneur, and CEO with sixteen years of experience working in the venture capital and asset management industries. She’s the cofounder and CEO of Beyond Capital, a pioneering impact investing fund dedicated to the belief that investing can inspire good and sustainably improve access to basic goods and services. She also co-hosts The Beyond Capital Podcast. Eva launched her weekly magazine, The Conscious Investor, in 2019. She has appeared in interviews with the lifestyle brands Goop and Thrive Global, and in Authority Magazine and Cheddar. She also has been a guest on numerous podcasts, and a speaker at family offices and impact investing conferences. Eva lives in Dallas, Texas with her family.