Understand impact investment

A world of complex problems

The scale of the world's problems has changed to become more global and more complex. Our current economic system has undoubtedly contributed to a formidable development in world prosperity and in the quality of life of people, but has also created major problems and inequalities. This is mainly because it has focused on maximizing return to investors while other values ​​have been given less priority.

At the same time, it is seen that the actors associated with doing good, charitable organizations, do not have the means or methods required to counter climate change and social problems like increased differences.

The solutions

One of our most important tools for fixing our problems is the same tool that has create the problems. Few instruments have shown a greater ability to come up with innovative and feasible solutions to problems than today's economical system. It has definitely been a big part of the problem, but also has the muscles required to be part of the solution, as long as it is done properly. By setting climate and social goals on a par with financials, and measuring their impact, one can create an economy that optimizes risk, profit and positive impact on people and the planet.

From exclusion to influence and positive selection

In recent years, there has been a greater focus on responsible investment, often referred to in the context of the factors environmental, social justice and corporate governance (ESG). This is basically nothing new, since many investors have been conscious about the moral responsibility that comes with managing assets for hundreds of years. Whether it has been to improve working conditions for miners or end apartheid. Where we put our money reflect which values and interests you have, and is a way of spreading these.

Different degrees of social investment can be distinguished by the extent of measures implemented. The first step is usually to exclude certain types of companies that do not coincide with the chosen ethical guidelines. The most common criterias are most often the exclusion of companies related to unethical weapons industry, alcohol and tobacco, and companies that violate human rights. In recent years, several actions have also been seen to encourage institutions to withdraw their investments from oil and coal.

Further measures are for managers to exert a positive influence on the companies in which they have invested. Through shareholder activism, they try to influence the companies' activities to become more sustainable and socially responsible.

Finally, you have managers who make a selection of the companies that are perceived as the best in their class. These are companies with activities that are believed to have a positive impact. This category of investment is often called impact investment.