Impact Investing is investing in a way that benefits the society and is not just about making profits. It is profits + satisfaction for a purpose which improves the lives of many. It’s a mix of philanthropy and equity. Remember, you will also make returns on this investment. Impact investing market provides a link between philanthropy and capital markets. This provides an opportunity for philanthropy institutions and grant makers to leverage their investment assets by going beyond contributions to further social change. Socially responsible Investing or Sustainable Investing is investing money or funds in businesses or companies which generates social or environmental good and may fetch profits. It’s all about investing in clean technology, green industries like solar, wind energy; pollution controls, organics, waste reduction or recycling. There is a subtle difference between Impact Investing and Socially Responsible Investing, where the latter is about not investing in companies which cause environmental or social harm (For Eg: Not to invest in Tobacco companies), but Impact Investors would invest in companies which generate environmental or social benefit. This is nothing but using “do-good” model instead of “do-no-harm” model.
tions and are looking to invest. Currently, a few foundations are working for this cause. There can be a mutual fund product designed to attract the customers who are interested in this type of investment. Being more of a social investment than a profit oriented investment; a small market can only prevail. Mutual fund markets can target HNI clients with an inclination towards philanthropy and other donations to invest in this product. They can also target the CSR teams of many big companies who raise huge amounts for social causes. These products can be made attractive for individual investors by creating a rationale that these investments will not just generate returns but also create immense satisfaction for their contribution to the society.
Siddardha Narayanasetty Class of 2013 PGDM, NMiMS Hyderabad
FINANCE
TAKING STOCK
Challenges for the Mutual Fund Company will be:
i. Convince the investors to invest even with past data or track records out
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