Impact investing began as more of a philosophy than an investment strategy. The Millennial Generation arguably made this style of money management somewhat of a household word. This group of emerging young professionals yearn to make a difference in the world, to leave things better than they found them. This line of reasoning ranges across their life decisions, from potential career choices to investment vehicles.
The Baby Boomer generation had a similar common philosophy among investors. They believed it was important to support companies and industries that supported what they found valuable. In turn, they taught their offspring to invest in companies they were familiar with and supported in other ways.
Strategic Value of Impact Investing
The question of whether impact investing is a trend or a viable investment strategy does not have a clear cut answer. Day trading was once thought to be a passing trend, and that popular investment strategy of course still attracts tons of new investors each year. The strategy behind impact investing is not radically different from any other investment style. The overall goal of course is to earn a satisfactory rate of return. The major difference for investors who focus on impact investing is the awareness and research of the underlying investment options.
Social Implications of Impact Investing
When investors choose to research companies before they invest, they are making a stand for what they believe in or against what they do not support. This helps raise awareness for multiple causes and also brings to light some potentially unsavory business practices. The focus for impact investing is to ensure human and natural resources are treated equitably and nurtured in a way that supports sustainable growth. The promotion of healthcare systems, forest replenishment programs, and many other worthwhile agendas has been successful through impact investment agendas.
Political and financial leaders have identified the benefits and long term gains that can be directly linked to impact investment efforts. Industries are being forced to move toward transparency in their business transactions. Corporations and organizations are being asked to release their goals for sustainable development. All parties and organizations are expected to reduce their carbon footprint and increase their focus on campaigns that promote healthy lifestyles and the advancement of developing nations and peoples. All things considered, even if impact investing is a passing trend, it’s already done a world of good.
Christopher Jacob is a Registered Representative with Saxony Securities, Inc.. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.