- More and more investors are pursuing environmental and social goals alongside economic ones
- The market for Impact Investing is growing and offers substantial opportunities
- Private investors will play a vital role in making the world more sustainable
Impact Investing improves our world
Impact Investing is more than just a new wrapping for ethical investments. While some sustainable investment funds have an indirect influence - for example by not investing in defence companies or environmental offenders - impact investors have a stronger moral mandate. They want their capital to proactively contribute to making the world a better place, and put their money into companies that share their goals. Or they are committed to ensuring that company directors change their behaviour and make their companies more environmentally and socially conscious. It’s a strategy which is working and conscientious investors are already starting to have an impact.
The 17 SDGs (Social Development Goals) of the United Nations provide clear orientation for investors when it comes to Impact Investing. Goal No.6, for example, is "Clean water and sanitation": therefore investors who want to use their capital to ensure a better future for all, can invest in the shares of companies whose technology contributes to the purification or storage of water. "Currently eight of the 17 UN sustainability targets can be directly invested in," explains DWS fund manager Paul Buchwitz.
You don't have to be wealthy to have an impact
While it is true that only the major investors in a company have the clout to influence strategic decisions and re-orientate the company towards sustainability, nevertheless, private investors can exert an indirect positive influence. They can invest in a fund whose managers actively influence company decisions, either at general meetings or in discussions with a company's supervisory board.
Private investors can increase their impact capital incrementally
Just as a salary goes a lot further than a financial windfall, with the help of a savings plan, investors can pay small amounts into an impact fund every month. And the amount of the monthly instalment can be adjusted at any time. The flexible approach offered by Impact Investing gives the investor more control, while their capital goes on increasing over time.
Junge Menschen fliegen auf Impact Investing
Die Vertreter der sogenannten Generation Z (Jahrgänge 1997 bis 2012) interessieren sich besonders für Impact Investing. Die Grafik zeigt den Prozentsatz derjenigen, die bereits in Impact Investments investiert sind oder entsprechende Investments planen.
With Impact Investing capital will grow steadily
The view that only investments which smoke, stink and sidestep moral issues is where the big money is made, is completely outdated. The majority of investors are interested in the long-term success of a company, not just in the next financial year. The good news is that Impact Investing lays the foundation for steady growth, because companies that are already positioning themselves in line with sustainability goals will have a big advantage over their competitors in the future. Impact investors are creating the pioneers of tomorrow.
The Future of Impact Investing
Impact Investing is on the rise. The Global Impact Investing Network (GIIN), a non-profit organization of environmentally and socially-motivated investors, estimates that the assets invested worldwide by Impact Investing already amount to around 228 billion US dollars. The market segment is still relatively small but growing steadily. Generation Z-ers (those born between the mid-1990s to the mid-2000s) in particular want to make a positive contribution to the world. When these young people start making their first investment decisions, then Impact Investing will really take off.