'Impact investing' has been a buzz word for quite a while now and has multiple definitions and schools of thought. Call it ESG investing (based on the Environmental, Social & Governance principles), SDG investing (based on the UN's Sustainable Development Goals) or simply, ethical investing, it aims to solve problems and positively impact the society in one or more ways.
Investing for impact has been around for a long time and has positively touched millions of lives. From a financial returns point of view, however, it hasn’t had the best rapport till now.
Well, the 1990s craze around sustainable investing didn’t live up to its expectations so how is it going to be any different today?
It is going to be different because the world has changed considerably in the past two decades. The 'concern' for environment conservation back then has today transformed into a heightened alarm with issues such as climate change, plastics pollution, loss of biodiversity, deforestation, social inequality and water shortages that have become very real and tangible threats to our planet and our survival.
So, if there is a financial vehicle out there that doesn’t take into consideration one or more dimensions of ethical investing, their investors, partners and employees, let alone the governments and non-profits will raise serious concerns as to why not!
Let's make it clear - impact investing isn't about giving away money or doing things strictly for social good. It really is about investing funds to do good while improving returns and ensuring healthy diversification.
The VC Impact Investing spectrum (as outlined above) helps actively filter out investment avenues that harm or are detrimental to social impact. Furthermore, the selection and due diligence process follows the same steps as for any other VC investment and is more rigorous to ensure positive impact over the long run.
Manav is a seasoned professional with experience in social impact, operational strategy, transformation and strategic initiatives. After leading teams and functions for almost a decade across various divisions, companies and geographies, Manav is leading impact investing and investor relations at Hatcher+. Manav holds an MBA from the NUS Business School in Singapore and represents the NUS MBA cohort as the President of the Students' Council.
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|impact investing, ESG, SDG, ethical investing|