What is impact investing?

Impact investing is a relatively new concept that has emerged in the past few years, as businesses and investors become more aware of the impact that their activities have on society and the environment. Simply put, impact investing is the practice of investing in businesses or organizations that have a positive impact on the world, whether it be through social, environmental, or other means.

At its core, impact investing is about using the power of finance and business to make positive change in the world. Rather than simply focusing on maximizing profits, impact investors seek to invest in businesses that are aligned with their values and have a clear social or environmental mission, in addition to a high return. This can take many forms, from supporting renewable energy projects to investing in companies that promote gender equality or provide access to healthcare in underserved communities.

One of the key characteristics of impact investing is the focus on measurable outcomes. Impact investors are not satisfied with simply supporting businesses that have a good mission statement or a compelling story. Instead, they want to see tangible results in addition to positive returns, whether it be in the form of reduced carbon emissions, improved access to education, or increased economic opportunity for marginalized communities.

Another important aspect of impact investing is the willingness to take on risk in pursuit of social or environmental goals. Many impact investments are in early-stage or unproven businesses and technologies that are working to solve complex problems. As a result, these investments may carry more risk than traditional investments. However, impact investors are often willing to accept this risk in order to support businesses that are working to create positive change, as well as offering a potentially high return.

Impact investing is also generally a collaborative effort. While individual investors can certainly make a difference, impact investing is most effective when done at a larger scale and in partnership with others. This may involve pooling resources with other investors to support a particular project or working with governments or nonprofits to create policies or programs that support impact investing.

Overall, impact investing represents a powerful approach to investing that is focused on making positive change in the world. As more businesses and investors become aware of the impact of their activities, impact investing is likely to continue to grow in popularity and influence. If you are interested in learning more about how 1 World Sustainability’s services can be incorporated into the impact investing due diligence process, reach out to us to have a conversation.