Impact investing becoming mainstream

Impact investing, once a niche area of the investment market, appears to be entering the mainstream.

Something we have noticed at Informed Choice in recent years is a growing number of our clients expressing an interest in socially responsible and ethical investing.

Impact investing describes investing in companies and investment funds which have the ability to generate positive social and environmental impact, as well as financial returns.

It describes an approach described in my recent podcast interview with Lisa Stanley, founder of Good With Money, is matching a vision of selecting financial products which are both a good deal financially and ethically.

According to new Standard Life Investments research, carried out by The Wisdom Council, 80% of UK respondents think human rights, equality and eradicating poverty are important considerations when investing.

The same number do not expect to sacrifice investment performance when investing in values-based funds.

The research highlighted that under 40’s are more likely to use values based investing, invest in funds that aim to make a positive difference and are familiar with the term impact investing.

There is an increasing recognition that publicly traded corporations have the ability to generate significant environmental and social benefits.

By channelling large amounts of mainstream capital into publicly listed companies whose primary business models address pressing environmental, social and economic challenges, investors have the ability to achieve positive impact at scale.

Amanda Young, Head of Responsible Investment, Standard Life Investments, said:

“The case for impact investing is strong. It represents a tangible way for socially and environmentally aware investors to deploy their capital in a manner that meets their environmental, social and financial goals.

“As we move forward we will no doubt see a wider range of investment vehicles, as well as more diverse impact targets. Measurement will also become increasingly sophisticated and standardised.

“Our research highlights that we expect demand for socially responsible, values-based investments to continue to grow, particularly among millennials.

“For asset managers and advisers that embrace impact investing and offer suitable products to cater for this market, the future looks bright.”