Understanding the impact investment mindset

Impact investing has grown tremendously over the last decade and in large part because investors aren’t just looking at unrealistic returns. Add to that the fact that positive environmental and social outcomes are becoming increasingly more measurable.

Impact investing means putting your money behind companies that will generate positive environmental and social outcomes. The result: the financial returns for such investments would be more meaningful.

Environmental and social factors are becoming increasingly important for companies to achieve their long-term goals. On the other hand investors are becoming more savvy about aligning their money with the things they’re passionate about. Therefore, I do see a brighter future and I expect that this industry will only continue to grow.

Another reason impact investing is experiencing phenomenal growth is largely due to the driving force of millennials and the later generations who want their investments to do more than just make money. These consumers also buy from companies that are aligned and support their values and philosophy.

According to the Coldwell Banker Global Luxury report, by 2030, millennials will hold five times as much wealth as they have today and are expected to inherit over $68 trillion from baby boomers over the next 30 years. These numbers indicate potential for exponential growth in the impact investing sector.

But it isn’t just young investors who have caused the spike in impact investing; over the last few years, the number of impact investors is rising across all sectors. These investors are also being called ‘personal values investors’ – those who want to align their personal values with their investments.

Research by a number of international investment companies reveals a very positive picture regarding impact investing. The evidence emerging shows that investments in companies that prioritise social and environmental objectives perform as well financially as traditional investments because consumers’ mindset is changing.

Philanthropy can also bring itself to work with an impact investing mindset. From community development to climate change and social causes, more and more foundations could bring about a positive change – not just on a local or regional level, but on a longer-term global level as well.