Post by hasina999 on Oct 31, 2024 2:16:50 GMT -5
Sustainable and responsible finance may be the buzzword of the moment, but it doesn’t automatically lead to impact . Our expert, Julien Lescs, explains how to differentiate these terms, what steps to take to make a meaningful impact, and the 3 steps to becoming an engaged investor .
What is impact investing (definition)
Impact investing is defined by the Global Impact Investing Network (GIIN) as “investments made in companies, organizations and funds with the intention of generating environmental and social impacts alongside a financial return.”
Sustainable finance, responsible finance, impact investment: what are the differences?
Sustainable finance has become a woocommerce web design service buzzword in recent times, which is understandable since impact investing offers the opportunity to invest while trying to make a positive contribution to society and the environment.
Despite this, few people seem to understand the difference between responsible finance, sustainable finance and impact investing, which is crucial to avoid situations such as greenwashing .
To become an impact investor, start by defining financial and impact goals , as well as desired outcomes and available resources.
Impact investing adds a third dimension to the traditional financial “risk-return” pair : it is a new way of investing, an opportunity to harness the power of capital while contributing to the improvement of our environment and our society .
To become an impact investor, it is essential to define your financial and impact goals . To do this, several elements must be taken into account, including the time and resources available, the desired impact, your risk aversion and your investment thesis. And to avoid “greenwashing”, it is essential to understand the differences between so-called responsible finance, sustainable finance and impact finance .
The 3 criteria of the impact investor to target its investments
To become an impact investor, start by targeting your investments . There are 3 criteria
3.1. Negative Filtering:
This is an approach used by investors to avoid controversial sectors that they do not want their money associated with. This is the first step in responsible finance , which often goes beyond financial risk and return. This method eliminates sectors that are contrary to the investor's values . Typically, these sectors are weapons, tobacco, alcohol, pornography or gambling. Avoiding these sectors automatically guides the investor into the territory of so-called responsible finance .
3.2. Integration of ESG criteria:
The consideration of environmental , social and governance (ESG) considerations in investment decisions follows this reasoning: extra-financial performance is correlated with financial performance.
If a company's ESG management practices leave something to be desired, its performance may weaken in the future because it will not have prepared itself to be a responsible company . Taking these extra-financial criteria into account allows, among other things, to obtain the SRI label - socially responsible investment. This means that the investor enters the world of so-called sustainable finance through its sustainable business activities. But sustainable does not mean having an impact.
What is impact investing (definition)
Impact investing is defined by the Global Impact Investing Network (GIIN) as “investments made in companies, organizations and funds with the intention of generating environmental and social impacts alongside a financial return.”
Sustainable finance, responsible finance, impact investment: what are the differences?
Sustainable finance has become a woocommerce web design service buzzword in recent times, which is understandable since impact investing offers the opportunity to invest while trying to make a positive contribution to society and the environment.
Despite this, few people seem to understand the difference between responsible finance, sustainable finance and impact investing, which is crucial to avoid situations such as greenwashing .
To become an impact investor, start by defining financial and impact goals , as well as desired outcomes and available resources.
Impact investing adds a third dimension to the traditional financial “risk-return” pair : it is a new way of investing, an opportunity to harness the power of capital while contributing to the improvement of our environment and our society .
To become an impact investor, it is essential to define your financial and impact goals . To do this, several elements must be taken into account, including the time and resources available, the desired impact, your risk aversion and your investment thesis. And to avoid “greenwashing”, it is essential to understand the differences between so-called responsible finance, sustainable finance and impact finance .
The 3 criteria of the impact investor to target its investments
To become an impact investor, start by targeting your investments . There are 3 criteria
3.1. Negative Filtering:
This is an approach used by investors to avoid controversial sectors that they do not want their money associated with. This is the first step in responsible finance , which often goes beyond financial risk and return. This method eliminates sectors that are contrary to the investor's values . Typically, these sectors are weapons, tobacco, alcohol, pornography or gambling. Avoiding these sectors automatically guides the investor into the territory of so-called responsible finance .
3.2. Integration of ESG criteria:
The consideration of environmental , social and governance (ESG) considerations in investment decisions follows this reasoning: extra-financial performance is correlated with financial performance.
If a company's ESG management practices leave something to be desired, its performance may weaken in the future because it will not have prepared itself to be a responsible company . Taking these extra-financial criteria into account allows, among other things, to obtain the SRI label - socially responsible investment. This means that the investor enters the world of so-called sustainable finance through its sustainable business activities. But sustainable does not mean having an impact.