Investing for Social Impact Is Complicated. Here Are 4 Ways to Simplify It.
By Paul Sullivan
Investing in companies or organizations that make a positive change on society can be a bit like indulging in a vice: A lot of people might enjoy it privately, but they’re not comfortable talking about it publicly.
When asked about this strategy, known as impact investing, investors typically give a lukewarm response or sidestep the topic altogether, researchers have found. A common refrain is to raise concerns about an investment’s influence and how any trade-offs with returns are measured.
But recent research geared toward individual investors, financial advisers and fund managers has found that impact investing is more broadly popular than advisers believed and that this may be a golden age for measuring the financial and social returns on such investments.
Nearly three-quarters of Americans have moderate to high interest in sustainable investing, according to new research by the financial services firm Morningstar. That interest, the study found, is broad and deep. It also runs contrary to a common belief among advisers that interest in this type of investing is confined to millennials and women.
Photo courtesy of Sudipto Sarkar.