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
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.