Impact investing has come a long way in the past few years, with more and more people looking for ways to make positive social or environmental changes through their investments. In 2021, we saw record levels of capital deployed into impact investments, and it looks like this trend is set to continue in 2023.
In this article, we’ll examine some of the most important impact investment trends that are expected to take off in the coming year, how they will shape the industry, and how you can get involved. So if you’re interested in investing with an eye towards making a difference in our world, read on to learn more about what’s ahead in 2023.
What is impact investment?
There is a growing interest in impact investments, which are investment vehicles that aim to create positive social or environmental impact alongside a financial return. Impact investments can be made in a variety of asset classes including private equity, venture capital, real estate, debt, and fixed income.
Many impact investors seek to invest in companies or projects that address social or environmental issues such as affordable housing, healthcare access, renewable energy, microfinance, and education. While some impact investments are made for purely philanthropic reasons, others are made with the intention of generating financial returns.
The size of the global impact investing market is estimated to be between $114 billion and $228 billion. Impact investing has grown rapidly in recent years, despite being a relatively small portion of the overall global investment market.
The benefits of impact investments for companies and society
There are a number of benefits that impact investments can bring to companies and society as a whole. Firstly, they can help to generate positive social and environmental outcomes, while also providing financial returns for investors. This can create a more sustainable business model for companies, as well as benefit society as a whole.
Secondly, impact investments can help to attract new investors and capital to specific sectors or geographical areas. This can help to stimulate economic growth and development, as well as provide much-needed capital for social and environmental projects. Finally, impact investments can also help to build trust and confidence in businesses, which can lead to improved relationships with customers, employees and other stakeholders.
How to get started in impact investing
If you’re interested in getting started in impact investing, there are a few things you need to know. First, you need to understand what impact investing is and how it differs from other forms of investment. Second, you need to identify your goals and objectives for impact investing. Lastly, you need to find the right opportunity that aligns with your goals.
Impact investing is a type of investment that seeks to generate positive social or environmental impact alongside financial returns. Impact investments can take many different forms, including equity investments, debt financing, and grants. Unlike traditional philanthropy, which typically donates money with the expectation of no financial return, impact investors expect to earn a financial return on their investment while also making a positive social or environmental impact.
There are many different ways to get started in impact investing. The most important thing is to identify your goals and objectives for impact investing. Do you want to support businesses that are working to solve social or environmental problems? Do you want to invest in companies that are creating new products or services that have a positive social or environmental impact? Once you know what you want to achieve with your investment, you can start researching opportunities that align with your goals.
A great place to start if you are a South African business is consulting with our Decusatio Impact Investments division where we help tailor-make a solution that caters to your business needs and goals. We do this through working with trusted partners and established programs, including BlossomCare, Yes4Youth, Solana Energy, Adopt-an-SME program with SME.Tax, and others.
Why South Africa needs impact investments
South Africa is a country with a large infrastructure deficit. In order to meet the needs of its growing population, the country needs to make significant investments in sectors such as housing, transportation, and energy.
However, South Africa faces many challenges in attracting traditional investment capital. The country has a high level of political and economic risk, which makes it arguably unattractive to many investors. In addition, South Africa’s infrastructure needs are much greater than its current budget can accommodate.
This is where impact investing comes in. Impact investments are made with the intention of generating positive social or environmental outcomes, in addition to financial returns. By channelling private capital into areas that have public benefits, impact investments can help close South Africa’s infrastructure gap and create new economic opportunities for its citizens.
We would love to hear what you are doing impact investment-wise. At Decusatio, we pride ourselves on people, passion, profit and purpose. If you have any queries, reach out to me via LinkedIn or email (emma@decusatio.co.za).
