The path of development and globalization we have accelerated on for the last 300 years has brought profound advancements in health, technology, comfort, and prosperity, but today we face an ever growing array of challenges both socially and environmentally. Corporate growth and strong capital markets (i.e. stock market, banking system) have been our engines of progress, but we are to a point where those engines have created, or at least contributed to the critical issues we face today like income inequality and environmental sustainability.
It should not be unfathomable that businesses look beyond quarterly profits and act in the interests of society. Profit-maximizing behavior inconsistent with the public good puts too much onus on our bureaucratic system of oversight, taxation, and redistribution. The idea of returning values, accountability, and transparency to corporations and capital markets has the ability to address many of our challenges at their root, and impact investing is pushing us there.
Impact investing comes in a wide variety of flavors, but at its core it’s two things: helping a social or environmental cause (Impact) and making money (Investing). As simple as this seems, the concept still eludes many. Imagine that investors could make money by paying for job training for prison parolees, by conserving lands that are key habitats, or by making a business case and force a company to provide more benefits to workers. These are all real examples of impact investing in action today.