The Wharton School of Business recently released an article describing a “tipping point” in the rise of impact investing. In the past, the concepts of “financial gain” and “social good” have seemed mutually exclusive. But with impact investing on the rise, this is no longer the case. Impact investing refers to any investment in a company or organization that results in environmental and social returns in addition to simply financial gain. It has experienced increased popularity in recent years. Startups and established corporations alike are seeing a surge of impact-driven initiatives. There’s also evidence that suggests impact investments frequently outperform those with strictly financial motivations.
Christopher Geczy is an adjunct professor of finance at Wharton and his class on impact investing has garnered a lot of acclaim. He led a panel discussion titled “Mainstreaming Impact Investing” at the Social Impact Conference, sponsored by Wharton’s Social Impact Initiative. One of his notions is that millennials say they want to invest with purpose, and investment managers will need to be able to offer these type of investments to remain relevant. For impact investing to continue to grow in popularity, it must provide solutions for both governments and private companies.
Private capital will play an important role in impact investing. Recent years have seen an increased rate of collaborative, international impact investment efforts. This is an excellent indicator of rising momentum and with new data continually being analyzed, the overall process will continue to become more intuitive. In the simplest terms, impact investing is a “win-win” with more return on investment than simply money in your pocket. It means investing in the future of the planet and supporting worthy causes that impact the greater good. For anyone who has ever wanted to “get involved” but has struggled to figure out how, impact investing is an easy way to make money and make a difference at the same time.