What is Impact Investing?

It requires lots of mental exercises while making an investment. Every investment is made with an expected monetary or non-monetary return. Impact investing is something where capital is invested in return for some desirable impact.

Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending on investors' strategic goals. 

Read below links to know more about impact investing:

What is Impact Investing? Can it help form a Sustainable Economy?

Impact investments are an amalgamation of philanthropy and traditional investing and work to combine the best of both worlds. investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return is impact investment. 

A closer look at impact investing

Impact investing directs capital to enterprises that generate social or environmental benefits.  To know more about impact investing, click here:

Different types of Investing

The value of an investment is no longer just about returns. An increasing number of investors are also calling for their money to make a positive impact on society and the world at large. A growing number of investors want to see how much capital should you raise in your future round their money goes toward stocks or funds that are both profitable and reflective of their social values.

Three styles of investing fulfill this: Environmental, social, and governance (ESG), Socially responsible investing (SRI), and impact investing. ESG looks at the company's environmental, social, and governance practices, along with more traditional financial measures. Socially responsible investing involves actively removing or choosing investments based on specific ethical guidelines. Impact investing looks to help a business or organization complete a project or develop a program or do something positive to benefit society.

Difference between SRI, ESG, and Impact Investing

Sustainable investing includes socially responsible investing (SRI), environmental, social, and governance (ESG) risk factors and impact investing—each with its own specific characteristics and applications. .

SRI vs. ESG vs. Impact Investing

When it comes to choosing values-based investments, investors and their advisors need to understand the differences between SRI, ESG, and impact investing. Impact investing refers to private funds, while SRI and ESG investing involve publicly traded assets. To know more, read the article:
 

How to start Impact Investing?

Impact investing is a way of investing that not only brings financial returns but also has a positive impact on society. Impact investing can be achieved on a scale of ‘finance first’ to ‘impact first’.

‘Finance first’ investments are, for example, a company producing recyclable packaging or building affordable and sustainable housing. The companies are for-profit companies that deliver a day-to-day service or product, their operations are also sustainable across the supply and their product or service is contributing to achieving the UN SDGs. The companies are usually publicly traded on stock markets.

‘Impact first’ investments are, for example, supporting social enterprises directly or charities through a social impact bond. Social enterprises must have a sustainable business model from a revenue perspective but its main mandate is to deliver a service or product with a positive impact on the community. For example, a company that is growing food and employing ex-offenders to re-introduce them to the community. This is expected to decrease the rate of re-offending in the community.

Your guide to impact investing

Impact investing refers to the idea of investing in businesses that will cause a social benefit. Many impact investments are effectively open only to institutional investors and people or families of such high net worth that they invest at an institutional scale. To know more about impact investment, click here:
 

We, at OpenGrowth, are continually looking for trending startups in the ecosystem. This was a blog on Impact Investment and Different types of Investing. If you want to know any further information about the startup ecosystem or have any mind-boggling ideas, do refer to the other blogs at OpenGrowth. If you have any suggestions, do let us know in the comment section below. 

Contributor: Amrita Sinha

Amrita is in the field of media. She has a deep inclination towards writing and public speaking. She has the aim of removing the stereotypical mindset of society. She loves to read and photography is her passion.