Socially responsible investing is about creating and sustaining the kinds of cultural shifts that improve lives and communities around the world. Some of the challenges that social responsibility tries to overcome may seem daunting, or even insurmountable, but careful application of capital, technology, and other resources can help pave the way for a better future. Cultural changes don’t happen overnight because of the actions of one investor or one company, though; this is why impact investing is so important to the process of making responsible culture reality.
Through impact investing, conscientious actors may invest in solutions to the challenges the world faces, and break down misconceptions about returns, the size of the industry, and the nature of investing and philanthropy. The community can create a culture where problems are examined and solutions found, and impact investing can bring people and capital together where it counts.
Making Healthy Returns on Responsible Investing
Impact investing is a young field, so there is a lot of research to be done on the performance of socially responsible investment (SRI) vehicles. However, the research that does exist suggests the idea that impact investing means sacrificing financial performance, which is a myth. It’s possible for impact investors to make healthy and competitive returns on their investments.
The Global Impact Investing Network (GIIN) compiled available research into a report on the financial returns in impact investing. Most of the research focused on private markets, and more than a dozen studies on private equity and debt, real assets, and individual asset portfolios were examined by a number of organizations, including GIIN. The research demonstrates that across private market strategies, impact investing returns are comparable to conventional investing ones, and the market is growing.
There’s more to impact investing than numbers you can measure. Impact investing offers more investment options for an interested public, which leads to fund managers responding to their demands. For some impact investors, returns aren’t the main priority. Some investors target below-market returns if they’re supporting causes in which they believe; this is helpful to organizations seeking funding, whether from investors or grants. When a lot of people come together to support a cause or organization they believe in, a community can form — and community is at the heart of impact investing.
The Impact of Community
Social responsibility involves holding organizations accountable for their behaviors, and a community of informed, conscientious stakeholders is at the heart of impact investing. Investors, entrepreneurs and other change makers from diverse backgrounds and with a variety of talents are part of the network that’s going to drive social and financial returns, by allocating their resources and voices where they’re needed. One voice might make an impact, but a cultural movement can only be mainstream once a community builds on it.
This need for community in the impact investing field has big names trying to bring influential people together. For example, Forbes Media is inviting entrepreneurs, celebrities, creators, and other diverse people and businesses to become part of its Impact Investing Community. The goal of this community is to influence culture and drive capital to create impact in socially responsible ways. Forbes Media definitely has the clout to invite industry leaders into its community, but it can also reach out and make connections with people who are new to impact investing by teaching them about the field, its challenges and most importantly, its opportunities. Getting more people educated on the benefits of impact investing, for themselves and for the world, is an important part of making the movement mainstream.
Mapping Social Responsibility
No single investor or organization has the power to change a culture alone; it requires effort from many people working together. Community is about connections, and making those connections visible is an important part of keeping the momentum on the impact investing movement going. Transparency regarding the data in impact investing may encourage new investors and organizations to participate in socially responsible investments. Knowing what investments look like, who’s making them and how much capital is involved is important for mainstream investing; having access to concrete figures for a younger field such as impact investing helps clear up misconceptions, prove there’s a market, and encourage growth, learning and involvement.
The Impact Investing Network Map is one of the tools created to make it easier for impact investors to look at how socially responsible communities and investment vehicles are shaped. Building this map will also help investors visualize where the capital in the field is headed, and further understand the potential of socially responsible investing ventures. It also will be a useful tool for tackling transparency in the sector through education, and highlighting where improvements are needed.
The beta version of the Network Map helps visualize relationships between socially responsible companies based on self-reported and publicly available data. With more data — including information such as location, sector and impact objectives — comes a clearer picture of the field and its potential. Knowing the scope of the impact investing field will help encourage transparency from organizations and investor involvement, bringing like-minded companies and investors together, and encouraging growth and a culture centered around social responsibility.
A Socially Responsible Investing Future With Falcons Rock Impact Investments
Accessibility and transparency are big parts of socially responsible investing. Without access to information, investors can’t determine which vehicles are right for them, and companies can’t grow. Leaders in the sector can help the movement grow by sharing information about their involvement and connections, and investors can use this information to inform their decisions about where to put their capital. If you’re a socially responsible investor looking to make an impact, Falcons Rock Impact Investments can help. By joining a growing network of impact investors, you can help encourage growth and responsibility in companies around the world, and ultimately make it better for everyone. Learn more about our impact investing process and what you and your community can gain today.