What is Impact Investing?

Impact investing can be characterised by investments that have a positive environmental or social impact, alongside a financial return.

From investopedia: impact investing is “investing that aims to generate specific beneficial social or environmental effects in addition to financial gain”

From GIIN: “investments made into companies, organisations, and funds with the intention to generate social and environmental impact alongside a financial return”.

Assumptions made about impact investors

Impact investors are the same as micro-finance institutions
Impact investors are often confused with micro-finance institutions (organisations that lend very small amounts of money), and while there is indeed some overlap, impact investors are more likely to invest in a micro-finance organisation than do the lending themselves.

Impact investors only invest in emerging and developing countries
Many impact investors focus the majority of their investments in emerging and developing countries, but this is not the case for everyone. Big Issue Invest for example, focuses exclusively on investments within the UK.

Impact investors don´t make money (or lose money)
Although making money is not the only objective, it is not always less important than having an impact. Different investors have different approaches, but many investors place getting a return on par with having an impact (and this can lead to a wider debate over whether or not they are participating in impact washing).

Impact investing is highly risky
It doesn’t have to be! Certain impact investments are save options, and the sector is attractive to more traditional investors because it gives them a chance to diversify their portfolio.

Wanting to know more about impact investing? Feel free to get in touch and I’ll answer any relevant questions, publicly in this article!