There is a unique space where the goals of philanthropy to help people intersect with the ambitions of private enterprises to make profits.
It’s called impact investing.
This form of business finance combined with a desire to make positive changes in the world has come into sharper focus in the wake of the COVID-19 pandemic. As government resources have been stretched to the breaking point, corporate leaders in the private sector increasingly embrace their roles as agents for doing their fair share to uplift people struggling against hard times.
The same goes for venture capitalists, angel investors, and private equity firms. Today, more of them are willing to take the risk of using their money to create targeted impacts that will result in proven positive developments that are measurable and practical.
Thankfully, impact investments that uplift people while resulting in profits are becoming more common. Consider that 100 companies on the Dow Jones “Most Sustainable Companies” list reported average returns of 34.3% in 2020. That’s compared to 32.5% for the S&P 500 “regular” crowd.
One area where impact investing can contribute to developing efficient systems in a wide array of industries and processes. That’s because nothing will stop the world population from reach 10 billion people by 2050, even though overall population growth has slowed in the past two decades.
However, that enormous number of people will require sustainable and efficient systems to produce food, generate clean energy, build shelter, produce pharmaceuticals, provide health care, and much more.
None of these things will happen without a proactive approach to investment with a keen focus on sustainability. Fortunately, pouring money into these kinds of efforts will be profitable because they are “must-do” undertakings.
Impact investing, and sustainable investing are not new. However, the need to nurture this form of business activity and commerce has been catapulted into sharper focus in recent years and not just due to COVID.
Massive wildfires burning out of control in the Southwest U.S. and Australia, more significant and more deadly hurricanes, shortages of food in key areas, and other such “mass events” have raised the awareness that the planet Earth is on the brink.
That brink may be the edge of disaster — or it can be the start of a fantastic new world transformed by investment strategies that produce positive impacts.