Using your money for the greater good
For those looking to make the world a better place, but not wanting to sacrifice returns or profits, positive impact investing aims to support positive social and environmental issues at the same time as providing good financial returns for individual investors.
Over the years we have had many clients tell us that they don’t want to invest in certain things – usually tobacco, arms, animal testing etc but few who have a clear idea of what they really would like to invest in.
Now we can help clients who want to use their money to make a positive contribution, to find some great investment solutions.
These are the UN’s 17 Sustainable Development Goals and the more we can invest in the direction of these goals, the better world we will live in. If by investing in companies which exist to serve these goals, the companies become more successful, we as investors will also see benefits in terms of a sustainable return on our money.
The UN estimates that $5-7 trillion is needed annually to solve the 17 most pressing global issues as detailed above, by 2030. In response, the number of companies providing solutions is accelerating at a rapid rate, which in-turn is expanding the impact investment universe. As these businesses naturally focus on solving issues with a long-term impact potential, this mirrors in their long-term financial performance and growth potential.
The upward swing of positive impact investing is being led by millennials. This type of investing considers a company’s commitment to corporate social responsibility (CSR), or the sense of duty to positively serve society as a whole in addition to looking at the specific impact the company is making to the world.
A growing number of companies globally are working towards improving the impact of their everyday operations in relation to relevant environment, social and governance (ESG) factors. These companies are gaining competitive advantages by improving efficiencies, reducing their exposure to legislative or environmental risks, upping their reputation and improving their employees’ work-ethic. All of these improvements reflect good management – and drive profitability.
As you can see from the themes above, investor impact strategies are now covering a broader range of social and environmental issues and, in many cases, harness the latest technology or pioneer delivery systems to gain efficiencies and reach those most in need.
Positive impact investments can be made in both emerging and developed markets and can deliver a range of returns depending on an investor’s appetite for risk and their strategic goals.
The growing positive impact investment market provides capital to address the world’s most pressing challenges in sectors such as sustainable agriculture, renewable energy, conservation, micro finance, and affordable and basic services including housing, healthcare and education.
The following pictures show the effect of investing £1 million in an adventurous positive impact fund in 2017*.
Positive impact investing provides the opportunity to make investments that not only deliver financial returns, but also have the potential to generate positive outcomes that address some of the most imperative challenges that we face as a society, such as climate change and poverty.
Positive Impact Investing is important to us at Magenta. To find out more, do call us for a friendly chat or to arrange a meeting to discuss your options further.
*Information gathered from EQ Investors online calculator. All images with thanks to EQ Investors.
Magenta Financial Planning Limited is authorised and regulated by the Financial Conduct Authority.