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Impact Investment

Impact investing offers significant potential for growth. The term Impact investment in the broader sense means a lot. Impact investing literally means “ a financial undertaking that aims to generate specific and measurable benefits to society & environment in addition to financial goals. Conventional investment models are skewed towards giving more importance to financial gains. However, the impact investment philosophy gives equal importance to social and environmental benefits. It uses private capital to fund to address the issues faced in the society and the environment.
Impact investment has been gaining more traction, as evident on the ground, its growth in the last several years looks promising. The investment seeks innovative solutions and ideas with a dual return of assets, It also aims to measure the impact it has created and its outcomes. The organisation that promotes impact investment also benefits handsomely whilst improving overall reputation in the society.
The individual investor, trust, funds or organisation who applies the principle of impact investment would always believe in taking steps to create long-term value for the society. The art of doing impact investment is by adopting careful design and implementation of programs that are scalable to have a very positive impact on the society. The future of this society and environment largely revolves around making sustainable development goals to tackle the problems faced by society. The realm of impact investment looks beyond the single objective of just making financial gains but deploying capital in such a way that benefits the overall wellbeing of the society & environment.

The united nations estimates that reaching the Sustainable development goals in developing countries will cost around 3.9 trillion per year and private and public capital put together provides just 1.4 trillion.

Amid all the benefits discussed so far, impact investment means different things to different people. Some would see it as a strategy for beating financial benchmarks because a business that target the existing gap in social or environmental needs can be profitable, one other hand inspite of the guaranteed lower returns, still they would like to back the investment for the sake of the society or environment.

Social enterprises and impact creation.
At present mainstream managers are willing to allocate their share of money as capital to a promising company for impact-oriented business or to social enterprise, however, most of them are still reluctant to deploy a that significant portion of the money for such activities. So it is the responsibility of government agencies and large companies to expand markets for impact investing.

Designing new products and practices.
The impact fund managers need to be clear about the overall strategies they are going to adopt and its objectives, also it is equally important how to balance the nonfinancial impact with financial returns. Impact fund managers can also create sector or issue specific products whose impact can be measured consistently. Though impact investment still remains as a novel idea, if adopted across the board has the potential to bring significant changes in the society. Unlike traditional investment models, impact investment takes time to bear fruits also due to its long gestation period. it takes a longer time than usual to create an impact that can be realistically measured. But one thing is sure our world needs more of such impact investment themes, professional fund managers to handle and deploy the capital to its best use. But the overall transformative impact it creates in sectors like education, Healthcare and the environment is huge that can fetch huge dividends for the nation as a whole.

3 responses to “Impact Investment”

  1. drharigkrishna Avatar
    drharigkrishna

    Good

    Like

  2. dpranita583 Avatar
    dpranita583

    Very useful information.

    Liked by 1 person

    1. Prakash Avatar
      Prakash

      Thanks a lot

      Like

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