There are a variety of impact investing platforms that allow individuals to invest money with the intention of making a positive social and environmental difference in the world. These include robo-advisers, private equity funds and even microfinance loans. The benefits of impact investments are many and varied. They can generate financial returns comparable to or higher than traditional investments, help address social and environmental challenges and, perhaps most importantly, can provide a satisfying way for investors to express their own values.
While the majority of impact investment dollars come from large institutions such as hedge funds, private foundations and pension funds, a growing number of socially conscious financial services companies, web-based investment platforms and investor networks offer individual investors an opportunity to participate in the sector as well. For example, Aspiration is a new financial service company that offers a wide range of banking and retirement services along with a unique ‘People and Planet’ impact measurement system built into their banking app. Read more https://www.northwestrealestatesolutions.com/
Another example is a firm like Bridges Fund Management that manages specialist sustainable real estate funds. These include a number of social impact funds that focus on the delivery of affordable housing, green or energy-efficient buildings and community regeneration. These funds offer attractive returns and the added benefit that they are delivering on specific social and environmental goals such as reduced carbon emissions and improved living conditions for the local communities in which they operate.
Impact investing can also be found in the asset class of private debt, including microfinance and green bonds. The latter category typically focuses on providing small businesses in emerging markets with startup or expansion capital. The bonds can be a useful tool for investors to support companies that are developing and commercialising products with a social purpose such as sanitary pads for women in Kenya, clean energy for Bolivian villages or bilingual education in the United States.
As investors become increasingly cognizant of the link between corporate sustainability and business value, they are demanding more from their providers. This is driving a shift in the way that companies are measured and held to account for their performance on issues such as waste management, gender discrimination, child labour or traceability of seafood.
In the future, we anticipate that all mainstream investors will have to incorporate
ESG factors into their evaluation process. This will involve assessing and reporting on the performance of their portfolios against agreed upon ESG indicators. For this reason, we are already seeing increased interest in the Morgan Stanley Impact Quotient as an assessment and benchmarking tool that allows clients to measure their portfolios against their peers. The Index also provides a valuable source of information on ESG-related market trends. As the demand for impact investing grows, we expect to see further innovation in the design and reporting of impact metrics. This includes the development of a broader range of impact data sources and more sophisticated analytics tools. These will enable better, more meaningful and accurate identification of the impact of an investment.