Impact Investing / Social investment
Impact investing has multiple goals:
Firstly, impact investing is designed to make a competitive return for it's investors. It is not intended that returns would diminish when compared with traditional funds just because the investor wishes to invest in a better way.
Next, most impacts fund mangers will have a mandate to do no harm. This should be embedded into their investment ethos and practices. Most impact investing firms will outline this clearly so investors who wish to invest for impact can do so without conflict.
Finally, impact investment managers will actively seek to have a positive social impact through the companies and assets they choose to include in their social impact fund.
Some examples of positive externalities from Impact investing funds would be:
Financial Inclusion: banking services to underserved adults
Circular Economy: recycled materials
Sustainable Energy : renewable capacity increases
Food & Agriculture : risk management provided for farmland
Water & Sanitation: drinking water provided globally
Education & Employment: new sustainable jobs created
Sustainable Infrastructure: housing, commercial, transport
Health & Social Care: affordable medication and healthcare
This list is not exhaustive however, you can see how impact investing through an impact fund can generate positive social impacts as well as a competitive return for investors.
What does this mean for you? If you want to start impact investing in Ireland, how do you go about it?
For individuals, the easiest way to access impact investing is through impact investment funds. Impact funds will be available from some of the major investment and insurance companies based in Ireland. Individuals can choose to invest for impact via their pension or cash investments policies.
It is important to remember the fundamentals of good investing behaviour and sound financial advice don't change with impact investing. Putting your money into impact investment funds is as easy as selecting a traditional fund on the application form or online portal.
For companies, impact investing is available in similar ways. Company pension schemes can have significant amounts of capital built up over the years. Switching from traditional to impact investing can have tangible benefits for the organisation, it’s staff and society.
Companies with excess profits built up in accounts can opt to place those funds in corporate investment bonds. This options is becoming more popular with the general fall in deposit interest rates over the last few years.
Global Impact Investing:
Responsible impact investing IS global impact investing. From a diversification point of view, Ireland, the Irish economy, and it’s investment opportunities are too small or niche to provide adequate risk reduction to impact investing funds. A global impact investment fund will be a basket of ethically selected shares, bonds, and other assets which is spread across global markets and diversified in many industries. The key is that this fund can be accessed by customers in Ireland.
How Ethico can help:
As we said before, they fundamentals of sound financial advice do not change. This leads your money, which is invested for impact, to have the potential to earn a positive return over the long run and to generate positive environmental and social outcomes all over the world.
The most frequent feedback we hear at Ethico is how positive clients feel towards the idea that their money is working for them, while also being put to good use around the world. There is a synergy of purpose that aligns the two concepts.
At Ethico, we are happy to advise and give clear comparisons between Impact fund managers. We can also show you how to avoid "greenwashing" and give confidence that your savings are truly making an impact.
If you wish to discuss impact investing in more detail please make contact and one of our advisors will be happy to discuss your options.