Impact Investing – What is it, definition and concept | 2022

Impact investment is a type of investment aimed at objectives of social and environmental interest.

Encompassed in the financial framework, an impact investment stands out for the intentionality when facing it.

This happens because conceptually this type of investment responds to motivations of a social or environmental nature.

In this way, it invests in business projects, market values ​​or companies related to the improvement of living conditions in different places and the achievement of energy efficiency and sustainability.

In other words, investors targeting this field pursue as their main objectives the creation of a particular social benefit or the improvement of the environmental conditions of a certain territory.

On the other hand, the growing commitment of many organizations to the concept of corporate responsibility (CSR) has led to these types of investment projects enjoying greater relevance in recent years.

Highlights of an impact investment

Compared to other common investment alternatives in the economic and financial day-to-day, investments with impact funds stand out for:

  • Quantifiable character: Every investment maintains its formality and the need to have a detailed project, estimated costs and a potential result.
  • Positive Motivation: As previously mentioned, these investment actions are developed with a reputation-related aspect.
  • marked results: The success of the investment goes beyond the numerical or economic level, since it takes into account other milestones at a noteworthy level or of influence in society.
  • Opportunity Sectors: These investments are present in sectors such as renewable energy, the location of drinking water, the repopulation of natural spaces or fair, organic and sustainable trade.
  • potential return: Although the objective is social, the achievement of profitability is also pursued when betting on these investments.
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Impact investment and microcredits

There are multiple options or tools when launching impact investment actions. Many of them are included in sustainable and circular economy plans.

A large number of entities or organizations have useful financial resources when it comes to supporting certain causes.

A relevant example of the latter is the prominence of microcredits as an accessible financing model that can be granted in short periods of time.

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