May 18, 2015 Fact of the Day: Socially Responsible Investing and Impact Investing
DID YOU KNOW THAT A LARGE PERCENTAGE OF INVESTORS ARE FAMILIAR WITH THE CONCEPT OF SOCIALLY RESPONSIBLE INVESTING WHILE A SMALLER PERCENTAGE ARE AWARE OF IMPACT INVESTING OR MICROFINANCE?
In research recently completed by Spectrem Group, investors, when asked to rank their familiarity with socially responsible investing on a scale from 0 to 100, ranked themselves as 46.75. Their understanding of microfinance, however, was at 31.61 and Impact Investing was ranked at 28.94. In contrast, younger investors, those under age 35, were much more likely to be familiar with impact investing (35.76) and microfinance (43.12). Additionally, wealthier households were also more familiar with these terms.
What is socially responsible investing? In general, socially responsible investing is a strategy in which an investor seeks a financial return but primarily from corporations that are involved in practices that promote environmental causes, consumer protection and human rights. In the past, it was primarily limited to avoid businesses that were involved in the “sin” industries such as tobacco, alcohol, gambling or weapons. The definition has subsequently become broader and is focused on corporations that are doing good…not just staying away from companies promoting “sin”.
Microfinance is providing loans and related services to small businesses, primarily in developing regions.
Impact investing is making an investment into a company or organization with the intent to generate social or environmental impact as well as a financial return.
If you are interested in socially responsible investing, microfinance or impact investing, look at Spectrem's Perspective Investor Perceptions of Socially Responsible and Impact Investing