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Impact Investing

Impact Investing. Resources and Information from Liz Burroughs. What is impact investing?. An investment strategy whereby an investor proactively seeks to place capital in businesses that can generate financial returns, as well as intentional social and/or environmental goals.

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Impact Investing

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  1. Impact Investing Resources and Information from Liz Burroughs

  2. What is impact investing? • An investment strategy whereby an investor proactively seeks to place capital in businesses that can generate financial returns, as well as intentional social and/or environmental goals

  3. Impact Investing vs. CSR • A financial, investment strategy • Monetary returns are a dual goal alongside the “impact” in which you invested • CSR is “ideological” • The concept that you must give back to the community or environment from which you take resources • Not about monetary returns

  4. Expectations and Goals • Financial Expectations • Depends on the firm. Some funds will have a fiduciary duty to their investors to place financial expectations first (ex. Pension funds). Others, like foundations, are more dedicated to the social outcomes of their investment (ex. The Bill and Melinda Gates Foundation).J.P. Morgan Whitepaper

  5. Expectations and Goals • Social Impact Expectations • There aren’t really any standards yet – it’s still a new concept. • However, investments that merely do not have any negative social consequences do not meet the criteria. • Most investors use their own measures to determine how their social impacts are doing (little data available).J.P. Morgan Whitepaper

  6. Evaluation • B-Labs and GIIRS are organizations that evaluate companies and portfolios on their social impact as well as profitability. • A high rating from B-Lab or GIIRS alongside profitability generally suggests a positive investment.

  7. GIIRS (pronounced “gears”) • GIIRS = Global Impact Investing Rating System • “GIIRS is a comprehensive and transparent system for assessing the social and environmental impact of developed and emerging market companies and funds with a ratings and analytics approach analogous to Morningstar investment rankings and Capital IQ financial analytics.” (website) • http://giirs.org/about-giirs/about

  8. Human Impact + Profit = HIP R. Paul Herman wrote The HIP Investor, a great book on impact investing. The HIP Investor also has a wealth of online resources.

  9. A brief lecture from R. Paul Herman… • Impact investing doesn’t just occur when you invest in charities or causes. • Impact Investing as a new asset class?  • Not always true…Impact investments can be in the form of bonds, stocks, money market funds, etc.  • 90% of assets are in the top 10 banks. • We should be investing in community banks so that money is reinvested into the community. • Banking local versus big banking is an impact investment.

  10. Excerpt from The HIP Investor • “Now, there is a new investment approach—one that seeks bigger profits that capitalists pursue while building a better world that do-gooders desire. The goal is to generate human impact and profit, or “HIP,” simultaneously. HIP embraces a comprehensive view of society. HIP encourages for-profit companies to solve human problems, generating new customers, fulfilling employees, and serving society. HIP combines the pursuits of “doing good” and “making money” -- drawing from the best of both worlds. “HIP investing” seeks the goal of bigger profits for your portfolio while building a better world.” • www.hipinvestor.com

  11. New Fundamentals of Investing • When companies create value for society as well as shareholders, those firms can be more profitable and become the foundation of a stronger portfolio. • At HIP Investor, we quantify the human, social, and environmental impact of each investment. HIP's advice, scorecards, and portfolios seek both profit and impact. • These are the new fundamentals of investing.www.hipinvestor.com

  12. What’s the point? • “Success can be quantified, significance is intangible.” – Bob Moony, New Richmond Ventures • There are impact investing resources right in our neighborhood…

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