FAQ

What is impact investing?

Impact investing is an approach to investing that generates both financial returns and positive, measurable social or environmental impact. This type of investing goes beyond traditional methods that solely focus on financial gains and aims to make a positive difference on the world. There are numerous ways in which to exercise impact through investments. Education, circular economy, renewable energy, water protection, biodiversity are but a few examples.

Is impact investing profitable?

Yes, the goal of impact investing is to make a profit. Many investors have been hugely success with impact investment such as in renewable energy (First Solar), circular economy (AirBnB) or education (Stride).

What’s the difference between impact investing and ESG?

Both approaches have the generation of financial return as their primary objective.

While ESG (Environmental, Social, and Governance) is about ensuring companies avoid harm that could hurt financial returns, impact investing seeks to generate financial returns and actively create good in the world.

Impact investing captures double materiality, ESG does not. Double materiality comprises how a company determines the extent to which environmental and social risks factors affect business activities and financial performance, as well as how product services of business operations affect the planet and society.

In short, ESG is risk management-focused, while impact investing is purpose-driven and outcome-oriented.

Is impact investing popular?

Yes, impact investing is fast gaining in popularity. The number of investors looking to make a positive impact through their investment decision is growing at double digit rates and expected to reach 100 million by 2030.

What are examples of impact investments?

Impact investments can be made through direct investments in purpose-driven businesses, for example through specialized crowdfunding platforms. Social impact bonds, green bonds, microfinance, and ESG-focused stocks offer avenues to align financial returns with positive societal and environmental outcomes, fostering a better future.

Why is proxy voting a crucial part of impact investing?

In 2023, hundreds of US companies included votes on hot-button issues, such as climate, diversity or worker rights, in their annual meetings. Yet, due to lack of awareness and context, only 11% of private shareholders voted their shares. As a shareholder, whether you own shares directly or through funds, you have the power to make your voice heard by voting your shares. You may be surprised. Boards do care what their shareholders think.