Frequently Asked Questions

While impact investing has historically taken place in the private markets, four recent trends have resulted in increasing demand by individual investors who almost exclusively invest via the public market in stocks, bonds, ETFs, and mutual funds.

1. Many of these private companies are choosing to go public  🙌🏾
2. Existing public companies are shifting to incorporate positive social and environmental initiatives 👏🏽
3. Growth in the number of investors strategically signaling that impact matters 👊🏼
4. Governments and policymakers are increasingly creating incentives to support positive initiatives. 💲

We are committed to bringing awareness to investment strategies that targets a future financial return along with a positive social or environmental change. And it’s true that ‘sustainable investing’ takes a broader, holistic view, encompassing environmental, social, and economic dimensions. So, you’ll see that used throughout our articles.

But, our goal is to attract an audience with relatable and action-oriented messaging. We also chose to be inclusive of companies working to make positive changes, regardless of industry. So, we chose to lean on the word ‘impact’ in much of our website copy. Plus, it’s just better marketing.

And because we pull expertise from a large group of thought leaders and contributors, we respect their use of chosen terminology to explain their perspective.

These other terms are useful, but we have three goals that only ‘impact investing’ addresses:

• To focus on an investment strategy (not a framework)
• To educate our audience in a way that is actionable–Choose your impact
• To be inclusive of companies working to make positive changes, regardless of industry.

For context:

Sustainable investing and socially responsible investing (SRI) are often used interchangeably with impact investing, with adjustments made for specific company, policy or industry focus.

Values-based Investing is an umbrella term that encompasses impact investing, sustainability investing, socially responsible investing (SRI); and, environmental, social and governance (ESG). This term does a great job, but somewhat lacks real marketing punch.

ESG was initiated as a framework, not an investment strategy. ESG (environmental, social and governance) helps us understand how a company manages risks and opportunities around sustainability issues. It looks into the past and provides an evaluation. ‘ESG investing’ often focuses on eliminating industries from portfolios.

An impact or sustainable investing strategy is used to target a wide range of returns from below market to market rate, depending on investors’ strategic goals and risk tolerance. A financial advisor can help steer you to investments that are suitable and review the potential returns of each.

We use the Global Impact Investing Network (GIIN) organization as our main authority for defining our segments.

The growing impact investment market provides capital to address the world’s most pressing challenges in sectors such as sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services including housing, healthcare, and education.

Just about any individual or entity that seeks to invest for potential returns with an intention to achieve social or environmental outcomes is an impact investor. Examples include banks, community development finance institutions (CDFIs), financial institutions, family offices, foundations, fund managers, governments, individual investors, insurance companies, nonprofits, pension funds, and religious institutions.

No, Equities News does not provide investment advice. We are a media platform not a registered investment company or brokerage firm. Please consult a financial advisor before purchasing shares of featured companies or funds.

The first action to take is to choose an investment broker (online platform or traditional) and fund this new investing account with money, usually from your bank.

To choose a broker, you need to define your investment goals by asking yourself a few questions:

• How much help do you need? Online brokers provide educational tools and are typically more cost effective because you do your own research and place your own trades. While traditional brokers, you interview and select a licensed financial advisor who you consult with and pay an advisory fee for this advice.
• What is your investment ‘suitability’? You’ll hear this word a lot, suitability, which refers to whether you lean conservative, moderate or aggressive with your risk tolerance (or how much money you are willing to lose.)
• What types of assets are you interested in? Stocks, bonds, mutual funds, ETFs, etc?

Once you know the types of investments you’re interested in, you can start evaluating brokers based on a number of factors, including commissions, convenience, account minimum, account fees, pricing and execution, tools, education and features.

There are various online resources available for choosing the right broker and many people get referrals from family and friends when making this decision.

Starting in 2022, political scrutiny of ESG captured headlines after years of rapid growth in ESG investing. Critics suggest ESG investing is primarily motivated by political concerns and a potential drag on returns.

Others have raised concerns about the complexity and reliability of ESG scoring methodologies that tend to focus on how well companies manage their internal processes, rather than the real-world impacts of their products and services. Much of the backlash is driven by the perception that ESG criteria are biased against certain industries like oil and gas.

With charitable giving, you donate money to 501c3 classified organizations and can claim a tax deduction, but there is no expectation of your principal or a financial return coming back to you. Whereas with impact investing, you take on a degree of risk with your money with the expectation of a potential financial return when you sell asset shares.

Impact investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.