Impact investing is the process of intentionally making investments with the aim of creating a measurable beneficial impact on the environment or society, as well as earning a positive financial return.
One of the most popular forms of impact investing is by targeting companies that can contribute to the UN’s Sustainable Development Goals (SDGs).
Impact investing has three key components:
Some investors believe that impact investing should also incorporate the concept of ‘additionality’, which involves only allocating to businesses that they would not otherwise have chosen to invest in if they were not seeking to achieve a positive social impact. Once considered a niche form of investing, the increasing awareness of the SDGs has made it increasingly mainstream. It has also branched out to focus on specific SDGs or other themes, such as gender diversity and creating a circular economy.
Robeco offers a range of credits and equities funds that target the SDGs. In addition, a gender equality impact investing fund looks for companies making a strong contribution to promoting female participation in the workplace. And a circular economy fund targets companies involved in tackling the current ‘take-make-dispose’ linear economic model and replacing it with one focused on recycling, reusing and reworking. All are managed by RobecoSAM on behalf of both companies.
See also: Sustainable Development Goals, definitions of sustainable investing