Impact investing, where you purposefully select investments that are aimed at achieving certain social and environmental benefits, provide an opportunity to have a positive impact while potentially benefiting from financial returns.
ESG and impact investing
The concept of ethical investing has become more popular in recent decades. In 2004, the term ESG was coined, which refers to investments that prioritise environmental, social and governance factors. In practice, ESG investing often means avoiding companies or sectors that are linked to unethical activity. Impact investing is more of a proactive approach to change – it specifically focuses on organisations that are committed to having a measurable social or environmental impact.
The current focus of wealthy investors
A report1 found that 68% of ultra-high-net-worth private investors with an average $730m in assets felt that philanthropy should be combined with impact investing to generate impact. For example, you could donate to a charity project in its infancy, which you could then invest in further down the line.
A fulfilling investment option
With some effective planning, blending philanthropy with impact investing can be highly rewarding. You can have peace of mind that your money is being ethically invested.
1Barclays, 2023
It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.