Globally, there are undeniable changes shaping our future, such as climate change, ecosystem collapse, population growth, and scarcity of natural resources. If we are to turn the tide, these global challenges need the kinds of investments that are not just branded ‘green’ or ‘ethical’ or ‘impact’, but that truly make a difference.
Investors who identify with ethical, green or impact investing can’t fail to be delighted with its recent and continued growth. According to the Global Impact Investing Network (GIIN), the impact investing market has doubled within just one year, with the latest stats measuring in at over $228 billion globally.
While this is an incredibly positive development, it does raise some eyebrows. Investors should look at this number both with optimistic enthusiasm, as well as a critical curiosity. Rapid growth puts the impact investing market at risk of lowering its integrity. We now observe a market flooded with investment funds labelled as ‘green’, ‘ethical’ or ‘impact’; however, if you pull back the wrapping, you might be surprised that these funds’ credentials do not always stack up.
Admirable as it is to avoid investing in fossil fuels, tobacco or gambling, it only goes part of the way to address some global challenges. Filtering out the bad guys may leave investors feeling pleased they have avoided funding these industries, but, ultimately, they will most likely be frustrated that they haven’t overtly contributed to positive environmental change or helped deliver any new real benefits to society.
Investors need to be aware that many ‘shades of green’ exist in the ethical investment market and should use this knowledge to consciously decide the kinds of impact they want to make with their money.
These shades of green indicate that it is clearly time to adopt industry-wide definition on what impact investing exactly is – and isn’t. This would make navigating the options for impact investment funds more straightforward, less confusing and less likely to disappoint those who wanting to proactively make their savings work for real, positive change. Until then, investors need to do their homework to judge whether specific investments, and the approaches taken by fund providers, are delivering positive impact they want to see in the world.
Is the investment provider trustworthy? Do they have a clear vision for the impact they seek to make? And do they understand the investment risks and opportunities involved with each underlying holding, to deliver the best possible management of your money?
We can say proudly that investors in the Triodos Impact Investment funds know green means ‘dark green’ when they chose to invest with us. Triodos only offers investment products that benefit people and the environment, while building a healthy financial future. This goes hand-in-hand with our proud heritage as one of the pioneers of impact investing, our 100% transparency on all the companies our funds invest in, and our strong shareholder voice which encourages greater sustainability practices and policies with the companies in the fund portfolios.
How you invest defines the world you want to live in. What shade of green investment defines you?
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