What is Impact Investing?
Summary
TLDRThis video script explores the concept of impact investing, an investment approach that seeks to generate both positive social and environmental impacts alongside financial returns. It distinguishes impact investing from traditional, responsible, and sustainable investing, as well as venture philanthropy and traditional philanthropy. Emphasizing the importance of intentionality in creating impact, the script encourages viewers to consider their values and strategy, experiment with funds, and contribute to addressing pressing environmental and social challenges for future generations.
Takeaways
- 🌐 The economy is designed to add value to the collective, not just to make money, indicating a need for a shift towards more meaningful economic activities.
- 🔄 The world requires serious economic shifting, and those who recognize this may consider impact investing as a part of their future plans.
- 📈 Impact investing has seen significant growth, with capital invested doubling over the last five years, according to Financial Times research.
- 💡 Impact investing is defined as investing with the intention of achieving positive social and/or environmental impact alongside financial returns.
- ⚖️ Impact investing sits on a spectrum with traditional investing focused solely on financial returns, responsible investing that excludes harmful investments, and sustainable investing that considers environmental, social, and governance criteria.
- 🌿 The philosophy of impact investing moves from 'do no harm' to 'intentionally do good', emphasizing both positive impact and financial returns.
- 🚫 Impact investing is not a single asset class but an investment approach that can be applied across all asset classes, themes, and geographies.
- 🌱 It offers a range of risks and returns, with investments ranging from private equity in fintech to supporting sustainable agriculture or renewable energy funds.
- 🛠️ Impact can be created in various ways, such as through services, products, or the operational practices of businesses, aiming to change the industry they are part of.
- 💭 When starting impact investing, it's advised to decide on what you care about, carve out funds for experimentation, and seek advice from experienced peers and professionals.
- 🌳 The script encourages considering the long-term impact of investments for future generations, emphasizing the power of choice in shaping tomorrow's world.
Q & A
What is the primary purpose of the economy according to the video script?
-The primary purpose of the economy, as mentioned in the script, is not to make money but to add value to the collective.
What does the term 'impact investing' refer to?
-Impact investing refers to investing with a specific objective of achieving positive social and/or environmental impact alongside financial return.
How has the amount of capital invested in impact investing changed over the last five years?
-The amount of capital invested in impact has doubled over the last five years according to the research by the Financial Times.
What differentiates impact investing from traditional investing?
-Traditional investing focuses solely on financial return with no impact objectives, while impact investing aims to achieve both a positive impact and financial return.
What is the main difference between responsible investing and sustainable investing?
-Responsible investing filters out harmful investments, while sustainable investing involves investing in companies that consider environmental, social, and governance criteria, still focusing on financial returns.
What is the essence of impact investing?
-The essence of impact investing is the intentional effort to do good, moving from a philosophy of 'do no harm' to actively creating positive social and environmental outcomes.
How does venture philanthropy differ from impact investing?
-Venture philanthropy involves taking high financial risks to drive the impact of social purpose organizations, whereas impact investing is about intentional impact and financial returns across a range of asset classes, themes, and geographies.
What are some examples of impact investments mentioned in the script?
-Examples include a direct private equity investment in a fintech company providing access to finance for underserved populations, supporting sustainable agricultural businesses, investing in a renewable energy fund, or purchasing shares in a sustainable forestry fund.
What are some areas where impact can be created according to the script?
-Areas where impact can be created include services or products provided, such as building solar-powered lamps for developing regions, developing natural washing products, producing healthy foods, and running businesses in ways that safeguard fair raw materials, honest working conditions, waste management, and offering jobs to those with fewer opportunities.
What advice does the script give for someone considering starting impact investing?
-The script advises to decide on what you care about and what your strategy is, carve out some funds to experiment, learn from experienced peers, professionals, and intermediaries, and to get started without waiting, as environmental challenges and social structures need attention now more than ever.
What is the final message of the script regarding the role of the viewer in impact investing?
-The final message is that the viewer has a choice in where their money creates impact, and they should consider doing this for the generations to come, as it is a story about choice and potentially about their future plans.
Outlines
🚀 Introduction to Impact Investing
The script introduces the concept of impact investing, emphasizing that the economy's purpose is to add value rather than solely generate profit. It suggests that the world needs a significant shift and that the viewer is likely aware of this need for change. Impact investing is defined as investing with the aim of achieving positive social and environmental impacts alongside financial returns. The script contrasts impact investing with traditional investing, responsible investing, sustainable investing, venture philanthropy, and traditional philanthropy, highlighting the intentional 'do good' philosophy of impact investing.
🌐 Impact Investing vs. Other Investment Approaches
This section of the script explains the differences between impact investing and other types of investments. Traditional investing focuses solely on financial returns, while responsible investing excludes harmful investments. Sustainable investing considers environmental, social, and governance (ESG) criteria. Impact investing is distinguished by its intentional pursuit of positive impact alongside financial returns. The script also clarifies that impact investing is not an asset class but an investment approach applicable across all asset classes, themes, and geographies, with a range of risks and returns.
💡 Examples of Impact Investments
The script provides examples of impact investments, such as private equity in fintech companies that provide financial access to underserved populations, supporting sustainable agriculture businesses, investing in renewable energy funds, or sustainable forestry funds. It emphasizes the intentional creation of impact through various means, including services, products, business operations, and industry-wide changes. The frontrunner companies mentioned aim to revolutionize their respective industries.
🛠 Advice for Starting Impact Investing
The script offers advice for those considering impact investing. It suggests deciding on the areas of impact one cares about, developing a strategy, and setting aside funds to experiment. It also recommends learning from experienced peers, professionals, and intermediaries. The call to action is to start investing now, given the urgent need for attention to environmental and social challenges, with a focus on the long-term impact for future generations.
Mindmap
Keywords
💡Economy
💡Impact Investing
💡Financial Return
💡Social Impact
💡Environmental Impact
💡Responsible Investing
💡Sustainable Investing
💡Venture Philanthropy
💡Traditional Philanthropy
💡Asset Classes
💡Risks and Returns
Highlights
The economy was created to add value to the collective, not just to make money.
There is a recognized need for a serious shift in the world's economic approach.
The video discusses the concept of impact investing and its growing importance.
Impact investing aims to achieve positive social and/or environmental impact alongside financial returns.
The amount of capital in impact investing has doubled over the last five years according to the Financial Times.
Impact investing is distinguished from traditional investing by its focus on intentional good.
Responsible investing filters out harmful investments, unlike traditional investing.
Sustainable investing considers environmental, social, and governance criteria.
Venture philanthropy involves high financial risks for social impact, contrasting with traditional philanthropy.
Impact investing is an investment approach applicable across all asset classes, themes, and geographies.
Impact investments can range from private equity to renewable energy funds.
Investors can choose the type of impact they want to create, such as in services, products, or business operations.
Frontrunner companies in impact investing aim to change the entire industry they operate in.
Impact investing requires a balance between potential financial profit and social/environmental impact.
Advice for starting impact investing includes deciding on personal values and strategy, and experimenting with funds.
The need for environmental and social change is urgent, making impact investing crucial for future generations.
Impact investing is a story of choice, allowing individuals to direct their money towards creating necessary impacts.
Transcripts
the economy wasn't created to make money
the economy was created to add value to
the collective so you can say that the
world is in need of some serious
shifting and since you're watching this
video you're probably aware of this too
and you recognize the need for change
this is a story about choice and this
might be a story about your future plans
impact investing according to research
by the Financial Times the amount of
capital invested in impact has doubled
over the last five years but what is it
exactly the most accepted definition for
impact investing is investing with a
specific objective of achieving positive
social and/or environmental impact as
well as financial return so a positive
impact and financial return just to make
you a bit more familiar with the term
let's place it on a scale with other
sorts of investments on the right you
see traditional investing this is what
we call investing for the sole purpose
of financial return with no impact
objectives with responsible investing we
filter out harmful investments like
weapons or tobacco for example
when you're into sustainable investing
you invest in companies that take into
account environmental social and
governance criteria think water and
energy efficiency or an apparel company
with strong policies protecting fair
labor conditions still with a focus on
the financial side of the investments
starting here the philosophy behind the
investment slowly moves from do no harm
to intentionally do good which is the
essence of impact investing but before
we dive into this lets finish telling
you what it's not with venture
philanthropy you invest in social
purpose organizations taking high
financial risks in order to drive the
organization's impact traditional
philanthropy is grant based funding of
social purpose organizations often
simply donating money to create maximum
impact
now impact investing impact investing is
not an asset class it is an investment
approach across all asset classes themes
and geographies and has a full range of
risks and returns for example impact
investments can range from a direct
private equity investment in a fin tech
company providing access to finance to
underserved populations - alone
supporting sustainable agricultural
business or from an oat subscription in
a renewable energy fund to a share
purchase in a sustainable forestry fund
as we said it's about intentional impact
and financial returns when looking at
the impact side one can ask what's your
taste of good where do you want to
create impact this can be in services or
in products provided such as building
solar-powered lamps for developing
regions developing natural washing
products or producing healthy foods
impacts can also be made in the way
businesses are run or even on multiple
levels such as safeguarding the mining
of fair raw materials honest working
conditions
waste management or offering jobs to
those who have less opportunities
such frontrunner companies aim to change
the entire industry they work in
financial profit can be made in
countless proven and unproven business
cases so as with traditional investing
deciding which business models have
potential is art science than all the
fun of investing at the same time when
considering to start impact investing
there are a few things we can advise
decide on what you care about and what
your strategy is to approach this carve
out some funds to experiment alone from
experienced peers professionals and
intermediaries then just get started
don't wait environmental challenges and
social structures need attention now
more than ever so consider that you're
doing this for the generations to come
like we said this is a story about
choice you can choose where your money
creates the impact we need for
tomorrow's worlds
[Music]
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