The Why, When, and How of Impact Investing

One of the recent trends in investment strategies is a focus on sustainability. There are various types of sustainable investments to choose from including impact investing. We will look at what impact investing is and why it is important to your business.

In recent years, investors are putting a higher priority on the environmental and social effects of business operations. If you want to attract these new investments, your business needs to focus on its environmental impact and other sustainability factors.

In this post, learn how you can promote your sustainability and get the impact investors you need.

Key Takeaways

  • Impact investing prioritizes positive social and environmental changes over financial returns.
  • Impact investments come from government agencies, large corporations, or venture capitalists.
  • Impact investing encourages global sustainability by promoting efficiency and health.
  • Businesses that want to attract impact investments need to have a clearly defined sustainability goal with impact metrics.

What Is Impact Investing?

As a form of sustainable investing, impact investing is focused on delivering positive and measurable social and environmental changes along with a financial return. The desired changes should be an integral part of a company’s business model.

Depending on the investors’ goals, they can choose from a range of investment options with various risks ranging from public equity to grant support. The impact investment market gives sustainability-focused businesses access to much-needed capital to address pressing environmental issues.

This short video explores additional details about impact investing.

A true impact investor will find investment opportunities that align with their beliefs and desired impacts. For example, if an investor wants to help those living in poverty, he or she will invest in a business that is focused on that goal and delivers measurable results.

There are various types of impact investors:

  • Foundations
  • Enterprise capitalists
  • Family offices
  • Governments
  • Accelerators
  • Angel investors
  • Venture capitalists
  • Large corporations
  • International development agencies

Impact Investing vs. ESG Investing

If you are interested in investments that have a positive outcome, you are probably familiar with ESG investing. While ESG investing and impact investing are similar, there are a few differences that set them apart.

ESG investing considers “environmental, social, and governance” factors. Various independent groups evaluate businesses and give them an ESG score. Investors use these scores to determine which ESG investments they want to make. 

One of the most important differences between ESG investing and impact investing is that ESG investments are still primarily focused on the financial factors of a company, while impact investing is more focused on driving positive change. However, there are still many opportunities within impact investing for investors to get above-market-rate returns.

ESG investing is closer to traditional investing, while impacting investing is closer to philanthropy

Image Source

4 Reasons Why Impact Investing Is Crucial For the Future

As the world continues to experience one devastating natural disaster after another along with an ever-growing level of uncertainty, it has never been more important to focus on sustainability. When investors focus on impact investing, they can feel confident that they are helping to push positive change in the world.

Here are four reasons why impact investing is so important to the global future.

1. Improves Efficiency 

The COVID-19 pandemic exposed supply chain problems around the world. According to Fortune, 94% of Fortune 1000 companies experienced supply chain problems caused by the pandemic. Two years into the pandemic and the world is still reverberating with these issues.

Investing in solutions that will improve access to necessary supplies like energy, health care, food, and water will help take care of growing populations more efficiently and hopefully prevent future public health issues.

2. Promotes Clean Air

During the early days of the pandemic when much of the world population was shuttered indoors, the earth was able to make a slight recovery. NASA reported that NO2 pollution levels in the northeast United States were 30% lower in March 2020 than the monthly averages between 2015 and 2019.

Less air pollution during the COVID-19 pandemic gives us a hint of what impact investing could do

Image Source

Less air pollution has cascading benefits, most notably fewer breathing problems and related health issues. The pandemic has shown businesses what is possible when it comes to reducing emissions. Hopefully, these changes will encourage more investments in emissions-reducing technology. 

3. Environmental Health Improves Human Health 

Scientists, health professionals, and governments have long recognized that improvements in environmental health led to better human health. This contention was recently supported by data that suggests there were more COVID-19 deaths recorded in areas with greater pollution.

When businesses focus on improving human health, they may find that improving the environment is the first step. Investment money in this area can lead to health solutions for both the earth and our communities.

4. Prevents Problems Before They Happen 

When businesses invest in their future with aggressive goals, they can potentially avoid problems before they happen. Global industries have experienced the consequences of not doing enough to prepare for the future. Encouraging more impact investing now has the potential to elicit major improvements to the world.

How to Attract Impact Investments

Once you and your business have adjusted your business plan to focus more on sustainability, it is time to attract new investments.

Follow these steps to get started:

  • Choose the type of investments you want: There are various types of capital investments. While some come in the form of grants, others will need to be repaid.
  • Measure your impact: Impact investors want to see what kind of measurable effects your business plan will have. Add impact metrics prominently to your business plan and proposals. There are systems available that can help you plan for and measure your goals.
  • Research investors: Investors will research your business, and you should research them in return. SOCAP is an organization that can introduce you to impact investors.
  • Build relationships: After thorough research on your potential investors, start building relationships. Set up meetings to learn more about their investment strategies and sustainability goals to see if your goals align. Ask them about previous investments and explain how your business can help them meet their financial and impact goals.

Televerde Can Help You Promote Your Sustainability

With a renewed focus on sustainability, you are ready to set new goals for your business. Attract new investors that want to help you reach those goals and Televerde can help. 

We offer a unique marketing omnichannel experience that promotes your sustainability and attracts investors interested in making an impact through your business. 

Click here if you are interested in learning more about investing sustainably. Ready to see what Televerde can do for you? Contact us today to begin.

Related News & Blog

6 ESG Metrics and Criteria to Evaluate Your Business

Read Post