WHITE COLLAR | ISSUE 007
I
mpact investing is quickly catching on among funds worldwide. It is a fairly new practice that is built around a commitment to measure social and environmental performance, with the same rigor as that applied to financial performance.
This industry is still quite young. Just how young? Well, the term ‘impact investing’ emerged around 2007 and the funds that took on this challenge defined it as “investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.”
Some funds occasionally dip a toe in the shallow end impact investing for good publicity, but a few have decided to focus a majority of their resources, if not all, on impact investing. A good example of a fully committed fund is Generation Investment Management, which is run by former Vice President of the United States and avid environmentalist Al Gore. One of his favourite slogans is “sustainability is history’s biggest investment opportunity”. As time goes on the industry is attempting to create a standard that will be used to define what a ‘socially responsible’ company is. Currently,
companies that pass for socially responsible have a measure/rating called the Environmental, Social and Governance rating (ESG). An ESG rating is only awarded after looking at the policies and practices of the businesses and concluding that the business is making an effort to go green in one way or the other. A good example of how some companies achieve an ESG rating is when they use solar or wind energy to power their business. There are many ways a company could achieve this rating depending on how creative they are willing to get with their policies and practices. Many companies are figuring out how to bend the rules in order to get more ‘impact investing’ capital.
IMPACT INVESTING Investments to create a better future
A MAGAZINE FOR THE CAREER-PERSON AND ENTREPRENEUR
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