Impact investing is an investment strategy that seeks to generate positive social and environmental impact alongside a financial return. Impact investors aim to create measurable, positive outcomes in areas such as poverty alleviation, climate change mitigation, and access to healthcare, education, and clean water.
Impact investing differs from traditional investing in that the primary goal is to generate positive impact rather than just financial return. Impact investors use a variety of investment vehicles, such as private equity, debt, and public equity, to invest in companies, organizations, and funds that align with their social and environmental values.
Impact investing has gained popularity in recent years as investors have become more aware of the role that their investments can play in creating positive change in the world. The impact investing market is growing rapidly, with estimates that it could reach $1 trillion by 2020.
Impact investing can be challenging, as it requires careful selection of investments that meet both financial and impact criteria. Impact investors may also face additional risks and complexities, such as measuring and reporting on impact, and navigating regulatory frameworks.
Despite these challenges, impact investing is seen as a powerful tool for addressing social and environmental challenges and driving positive change.