What is impact investing: Brief history § the super simple definition for new investors.

Although we are hearing more and more about impact investing, it’s not a new concept as most people think. And the definition is pretty simple.

The term was first coined in 2007 by the Rockefeller Foundation. They wanted to come up with a distinguishing name for investments that had intention to make social or environmental impact while generating also a financial return.

What makes and investment impact investment?

The widely shared view by experts is that impact investments should have the following three qualities:

• Intentionality for impact. Impact companies and investors form what they call their “impact thesis”, which defines the activities they intend to perform, and how these actives are expected to create a certain environmental and social impact. Impact is not a side effect or something they do on the side. It is the core intent of their business or investment.
• Measurability, or as called in the jargon impact measurement and management (IMM) is critical. Just line financial management, impact management and measurement of returns is a sine non qua. IMM practices vary and are developing, and merit a separate article.
• Financial return. Impact investments are not charity work. Just like impact is intended, financial return, albeit it may be at different levels depending on the company and investor, are absolutely expected. Otherwise, it’s not an investment, it’s philanthropic donation or charity work.

Where is impact investing now?

According to the International Finance Corporation (IFC), $2.3 trillion were being invested for impact in 2020. $636 billion of this had a clear impact management system in place. More here: The Global Impact Investing Market 2020.

15 years after the term was coined, impact investing has become more and more popular.

Companies at all stages benefit from impact investing and create real measured, verifiable environmental and social impact.

What are some examples?

Here are 👉 some examples of amazing companies supported by investors who are doing well by doing good.

How can I get involved with little time and money to invest?

We declare our intentions every time we buy something, when we choose our portfolio in our pensions, when we accept jobs from corporations, or when we make individual investments as angels or through VCs.

For those new to this world, here are a few 👉 key tips on how to get involved in impact investing with little time and money to invest.

I hope you’ll join us to make the world a better place.

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