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:
Intentionality: an investor sets out to exert a positive impact
Return: it should generate a positive return on the investment
Measurability: the benefits should be measurable and transparent.
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.
Our RobecoSAM-labeled strategies offer a range of credits and equities strategies that target the SDGs. In addition, a gender equality impact investing strategy looks for companies making a strong contribution to promoting female participation in the workplace. And a circular economy strategy 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 of these strategies have been designed to have a positive, measurable impact on the environment and society and to contribute to the UN’s 17 Sustainable Development Goals (SDGs).