How to become an impact investor?
Sustainable and responsible finance might be the current buzzword, but that doesn't automatically lead to impact. An expert shares how to differentiate these terms and what steps to take to make meaningful impact.

What you need to know

  • Sustainable finance has become something of a buzzword recently, and understandably so as impact offers an opportunity to invest while attempting to make a positive contribution to society and the environment.
  • Despite this, only a few seem to grasp 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 outlining financial and impact objectives, as well as desired outcomes and available resources.

 

Impact Updated on June 13, 2022

Impact investing adds a third dimension to the traditional “risk-return” financial couple: It is a new way of investing, an opportunity to harness the power of capital while contributing to the improvement of our environment and society. To become an impact investor, it is essential to define your financial and impact objectives. To do so, several elements must be taken into account, including the time and resources available, the desired impact, one’s risk aversion and one’s investment thesis. And to avoid “greenwashing“, it is key to understand the differences between so-called responsible finance, sustainable finance and impact finance.

To become an impact investor, start by targeting your investments

Negative screening:

This is an approach used by investors to avoid controversial sectors that they do not want their money to be associated with and is the first step to responsible finance, which often looks beyond financial risk and return. This method eliminates sectors that are contrary to the investor’s values. Typically, these sectors are weapons, drugs, tobacco, alcohol, pornography or gambling. Avoiding these sectors automatically guides the investor towards the territory of so-called responsible finance.

About the Authors

Julien Lescs

Julien Lescs

Pyschodynamics & Impact Investing

Julien is co-founder of Kimpa, a family office dedicated to impact investing. Grandson of an agricultural family business that was destroyed in a fratricidal war, Julien has become a specialist in psychodynamics related to family business governance.

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