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​​Impact Investing: Making Money While Making A Difference

March 20, 2024

Your wealth has the power to meaningfully impact the world. Whether passionate about the environment, the arts, or human welfare, leveraging your wealth through impact investing creates positive, measurable social and economic change while securing financial returns.

Profits and purpose are not mutually exclusive; quite the opposite has been found. Impact investing’s rise in popularity has caused an increase in investment opportunities, and studies have found the demand for impact investing has been most prominent in Gen Z, Gen X, and Millennials.Impact investing is a strategy that seeks to achieve social or environmental goals and generate profit. The trend of impact investing represents a growing movement within socially responsible practices, which aims to mitigate the adverse effects of traditional business operations.

Here are five benefits of impact investing:

Support Ethical Corporate Practices: Impact Investing allows individuals or businesses to support companies whose values and practices align with their respective principles, such as ethical labor practices and employee mental well-being.

Many companies set environmental, social, and governance (ESG) standards to screen potential investments based on corporate policies.

Give Beyond Charitable Donations: Impact investing allows you to contribute to societal progress by supporting organizations expected to shape the future. This can provide another source of empowerment and meaningfulness to individuals and employees.

Possible trends to support range from sustainability and climate change to financial inclusion and gender equality.

Invest in Social Businesses: Through impact investing, you can support approaches addressing social issues that are not wholly reliant on philanthropic funds.

Since charitable organizations are not designed to solve the underlying problems they support, some businesses also choose to support social enterprises, which are businesses with specific social objectives that serve as their primary purpose. 

Examples of social enterprises include Warby Parker and TOMS.

Support a Globally Relevant Cause: Impact investing allows businesses worldwide to unite and invest in solving issues affecting the planet.

In recent years, there has been a surge in investments in clean energy, green infrastructure, and other environmentally-focused areas, which all aim to address the planet’s current climate crisis.

Directly Invest in Socially Responsible Entities: Through impact investing, you can invest directly in private companies or funds with an explicit social mission and avoid companies involved in controversial activities.

Socially responsible investing (SRI) is a type of impact investing that goes beyond ESG by actively excluding or selecting investments according to specific ethical guidelines. For example, SRI investors may avoid investing in companies that produce or sell alcohol, tobacco, or firearms.

Our expert team at Client 1st Financial is ready and excited to help you start your impact investing journey. Learn more about our charitable and philanthropic planning services, or contact us to start today.