Impact investing has moved from fringe to mainstream, but individual investors still have many moving parts to consider.
Above: Jed Emerson: “SDG Heroes” is an original SDG Photography series by Ralph Reutimann
If you’re committed to impact as well as wanting to protect your financial future, you can attain various levels of financial return together with the generation of social and environmental impacts. And, you can direct your resources toward not only providing for your future but for the future of your children and community. Here are four actions investors can take to help mobilize an impact investing strategy with confidence.
1. Fortune favors the prepared mind.
Good investing involves some level of luck — that the markets move up with you, that you select the right managers at the right time, and so on — but the fact is proper preparation can help increase the odds you’ve made the right decisions at the right times for the right reasons. Rather than attempting to “time the market” looking to take advantage of short-term ups and downs, stay focused on your long-term goals and plan for those goals through a sound strategy.
2. Impact investing is a lens — not an asset class
Simply put, impact investing is a lens through which one approaches the full spectrum of options and asset classes in the market and for one’s portfolio. Impact investing is not an asset class, and mistaking it for one does a disservice to the investor who may then be forced to compartmentalize the application of best practice. Instead, we should seek to let its practices and our pursuit of it flourish across the full spectrum of portfolio opportunities before us.
3. Impact investing is an evolving field — grow with it
This is the brave new world; be part of it along the way. Activated investors approaching impact across the full spectrum of their portfolio, demanding excellence and sustained value from the funds and companies they invest in, are well-positioned to benefit from and help in the creation of greater depth in the field of impact investing.
4. Don’t judge a book by its cover
As you explore the growing array of offerings, don’t get too wrapped up in whether or not something is called “impact.” What matters is not what someone says, but rather how an investment strategy is managed; what types of companies they invest in; the degree of intentionally and depth to their approach; and your ability to assess the kinds of extra-financial, social, and environmental value any given strategy advances. Remember: Some folks who claim positive impact don’t generate it, and some who have never heard the word are creating real sustainable value. Assess all those who claim to “do” impact investing, and you be the judge of what they do — not what they say.