Today, consumers are more concerned than ever about spending their money in a way that
supports their beliefs and values. Thats given rise to the prevalence of impact investing, also
known as socially-conscious investing. Impact investing combines the desire to make the world
a better place with the goal of a competitive return.
This is a personal approach to investment, since everyone has a different idea of what makes
the world great. Many people, however, have values that touch on environmental, social
concerns and governance issues. Because of this, a new metric called ESG has emerged,
allowing investors to measure how a company implements sustainable practices in these realms:
Environmental: Issues including water conservation and sustainable energy
Social Concerns: Workplace policies that include diversity, gender equality and equal pay.
Governance: Companies that give shareholders a voice and have diversity on the board of
The ESG rating is meant to give investors the whole picture of a company, instead of just a
glimpse into its financials. However, investors can expect to make a return on investments that
are as good as or better than “traditional” investing, since companies that have high ESG
ratings tend to be financially healthier, are less likely to go bankrupt and have strong predictors
for future growth. And by backing these companies, investors are taking a long-term approach
to support the business practices that they believe are most ethical.
After all, impact investing isn’t just about doing good — it’s also about doing well financially.