At the end of 2016, there was a conference about impact investing in Amsterdam. Naturally, the big topic of conversation was about investing in those vehicles and assets with social, environmental, and financial returns. What might surprise you is that some of the panelists weren’t from small niche companies focused on environmental investments—on the contrary, there was a representative from TIAA of America, which is one of the world’s largest pension funds.
This is encouraging for people who want to see that assets that go beyond financial returns and into philanthropy end up in the mainstream. Impact investing is becoming less niche and more mainstream: here’s how it happened and what that means for responsible investors moving forward.
Major Companies See the Power of Impact Investments Bigger companies are starting to pay attention to what it means to be socially responsible, which is a great sign of things to come. BlackRock, the world’s biggest asset manager, recently launched a division called “Impact” in order to get involved in the impact investment arena. Bain Capital and TPG have also launched impact funds, and Goldman Sachs recently acquired Imprint Capital, an impact investment firm.
When bigger companies like these launch investment products that take environmental, social and governance (ESG) criteria into account, two things happen. First is that it introduces these ideas to the investors and smaller companies that these are criteria to keep in mind when investing. Secondly, it demonstrates that there isn’t a need to sacrifice returns in order to do good things in the world. After all, if big, successful companies aren’t afraid to jump into this market, why should smaller ones or individual investors?
What’s Driving the Demand There are a few forces in the market that are driving the demand for impact investors that larger companies are picking up on. Deborah Winshel of BlackRock Impact cites investor demand, specifically the wealth held by young people and women. As these two demographics gather more traction in the investment arena, they demonstrate that their investment priorities are about more than financial returns because social issues are important to them.
There is also demand among institutional investors. It’s not just charitable foundations that are interested in social impact—pension funds and insurers are realizing how important it is to invest in ESG criteria for themselves as well as their stakeholders. This sector has also been on the receiving end of attention by policymakers and those that set industry standards. As a result, there are now organizational bodies that are helping to set common standards for these funds.
Going Mainstream Impact investors are people filled with optimism and fresh ideas about how things could evolve in the future. This is the kind of thinking that leads to the promising growth that data is increasingly showing is possible in this sector: as a result, the industry is becoming more mainstream and more opportunities to invest have arisen. In fact, responsible investing has already grown to a large extent in the United States, giving investors the opportunity to make an impact with their money.
Your Future with Falcons Rock Impact Investments As the options for doing more with your money expand, so too has the ability to do good where it matters. Impact investing continues to grow and make a positive impact—Falcons Rock Impact Investments can help you get involved. We strive to make the connections necessary for our investors to not only experience the best possible chances at returns while investing in what they believe in, but also to change the world for the better. To learn more about our process, get in touch today.