{"id":3603,"date":"2021-07-13T00:00:00","date_gmt":"2021-07-13T00:00:00","guid":{"rendered":"https:\/\/www.rbcwealthmanagement.com\/en-us\/insightswhat-is-impact-investing\/"},"modified":"2024-04-12T09:01:53","modified_gmt":"2024-04-12T13:01:53","slug":"what-is-impact-investing","status":"publish","type":"post","link":"https:\/\/www.rbcwealthmanagement.com\/en-us\/insights\/what-is-impact-investing","title":{"rendered":"What is impact investing?"},"content":{"rendered":"\n

From your shoes to your car to where you spend your summer vacation, how you spend your money speaks volumes about what you value. Yet when it comes to investing, many people seek only returns without thinking about what their money is supporting. With <\/span>impact investing<\/a>, investors are able to be more intentional about where they invest so their portfolios can have positive influence.<\/p>\n\n\n\n

\u201cEvery portfolio has an impact,\u201d says\u00a0<\/span>Kent McClanahan<\/a>, head of Responsible Investing for RBC Wealth Management, \u201cbut impact investing is about being more conscious of what your money is doing.\u201d<\/p>\n\n\n\n

Invest alongside your values<\/h2>\n\n\n\n

If there is a cause you want to support, you might donate to a nonprofit organization to back their mission. Impact investing is similar in that you invest in assets that intend to generate a measurable, positive environmental or social impact. However, you’re also analyzing these investments on their ability to generate a positive, if not competitive, financial return.<\/p>\n\n\n\n

Much like finding a nonprofit to support, start by determining the impact you want to make. Do you want to fund a startup biotech company that provides affordable medications? Or do you want to invest in a clean water fund? Perhaps you want <\/span>to ease income inequality <\/span>by financing affordable housing in your city? The goal is to seek investments that directly correlate to your cause, so you know your money is going directly to funding their work.<\/p>\n\n\n\n

At the same time, impact investing is not charity\u2014you should expect your investment to generate a financial return in addition to a societal return. How much of a return depends largely on your goals.<\/p>\n\n\n\n

\u201cOne of the dichotomies within impact investing is whether the expected returns are concessionary or market driven,\u201d says Ron Homer, chief strategist of Impact Investing at RBC Global Asset Management. \u201cThere are some impact investment strategies where returns are secondary to the impact. On the opposite side, our strategies are designed to provide the double impact of market returns and social benefits. In some cases, the social benefit can drive excess returns.\u201d<\/p>\n\n\n\n

Responsible investing applications<\/h2>\n\n\n\n

Impact investing is one of four subsets of responsible investing<\/a>. And while they all can generate desired returns while doing good, each strategy accomplishes that task differently. In addition to impact investing, the three other approaches of responsible investing include:<\/p>\n\n\n\n