Impact Investing – What You Need to Know

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Historically, the concept of impact investing has always been around, albeit in slightly different forms. Investments like this were not wholly similar to the impact investment strategies seen today but they had a common goal regardless: contributing funds for the betterment of society. Not every investment was made only in regard to social impacts – financial return certainly drove contributions too. Before the rise of publicly traded companies (starting with the Dutch East India Company in 1602), societal survival still drove many technological and societal advancements of the time and would persist even into the 20th century. As the idea of investing and sheer number of investors grew, combined with the establishment of stock exchanges the world over, it has developed into the expansive and complex system observed today.
Once rapidly developing companies began to become stable for wider populations, financial returns became the primary focus for investors. Although this had been a goal for investors since the inception trading, the markets were quickly becoming a way for investors just to make money and shift their profits elsewhere rather than fund and support the company because they wanted the company to flourish. In recent years, specifically around 2008 after the housing market crash, the term ‘impact investing’ has become an established concept to wider populations. The 2007-2008 recession was not the sole reason for the rise of impact investing, but it did help expose the greed and faulty investment logic that was harming rather than helping the markets. This article will explore the phenomenon of impact investing and all its facets from the basic definition all the way to potential future of an impact investing network.