Impact investing lets you focus on an issue that you care about and put your money into companies making a difference on that issue.
If gender equity is your concern, for example, you could invest in companies that provide equal pay to women and have women at all levels of their firm, including the senior executives and directors on the company’s board. If you want to do more to help the environment, you could invest in companies across all the categories of clean technology or within any specific area, such as clean water, air, transportation or energy.
If reducing inequality is important to you, you can invest in minority-owned businesses or in financial institutions with a good track record of providing loans to minority businesses or in companies that serve often-overlooked groups of people around the world who need financing to advance their small businesses.
Today, you don’t have to find these companies on your own. You can select from a variety of exchange-traded funds (ETFs) that will bring together companies working toward a specific issue like clean air or gender equity.
Impact investing falls within the broader category of sustainable investing, which focuses on companies working to ensure that the ways people consume the planet’s resources today do not sacrifice the needs of future generations. The United Nations has established 17 Sustainable Development Goals, such as good health and well-being and reduced inequality. Many companies and countries are working to support those goals. Impact investing can help achieve them. Many companies have signed the UN Principles for Responsible Investment (UNPRI) to publicly share their commitment to corporate responsibility.