August
30, 2021
4 min read
Opinions expressed by Entrepreneur contributors are their own.
Millennials and Generation Z catch flak for their spending habits and are often blamed for adversely affecting industries like diamonds, shopping malls and even the housing market. Investing, however, is one area where they are clearly changing the game for the better. The reason is simple: impact investing.
What is impact investing?
It is a strategy that prioritizes businesses that have a positive impact on society and yield positive returns. Enthusiasts focus on companies solving problems around sustainability, climate change, poverty, healthcare and education. The term was coined back in 2007, but its prevalence has only increased in the decade-and-a-half since.
The Global Impact Investing Network published the following tenets of impact investing that are central to the concept:
Intentionality focuses on the desire to have a positive impact on some element of society by funding a company’s cause.
Investors are still anticipating a return from their investments, over time, which differentiates impact investing from charity donations. While many still believe that investing is purely to drive profit and any “do good” efforts should be accomplished via charitable causes, impact investing brings together the best of both worlds.
Lastly, impact measurement is crucial to the overall concept. Rather than putting money behind a company, and trusting that the benefits to society will be...
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