It also helps with reaching new investors. According to a recent Bank of America survey, women are more inclined to be interested in impact investing – 70 per cent versus 30 per cent.
With women’s wealth growing faster than men’s, they are forecast to control the majority of wealth in coming years.
This is reflected in the EQ Positive Impact Portfolios, with 60 per cent of new investors within the past 12 months being female.
Morgan Stanley’s research also shows that millennials are more likely to look at the impact of their investments than other investors.
Young people might not look like the ideal clients as they struggle with student debt and high housing costs, but over the next 40 years they are set to inherit $59trn (£45trn).
The investors of the future will demand a different way to doing business.
Overcoming preconceptions
The rapid growth of impact investing has been countered by concerns about simultaneously achieving social impact and market-rate returns.
A benchmark study published by Cambridge Associates found that impact investing can capitalise on long-term social or environmental trends to compete with, and at times outperform, traditional asset class strategies.
Indeed, the positive impact approach itself favours companies that are trying to do good and run their businesses in a sustainable manner. Such companies avoid fines and other penalties; they have stronger relationships with their customers, suppliers and employees. Furthermore, they tend to operate in emerging sectors with high-growth potential.
Future prospects
The future for impact investing looks promising. According to the Global Impact Investing Network, the market had an estimated worth of $60bn worldwide in 2014, and is expected to jump to between $400bn and $1trn over the next three years. A growing market means there will more opportunities for people who want to get involved.
Today there is a chance to create a more integrated view of finance where people see that aligning their money with their values not only makes sense, but that it is critical to building the kind of world we want to live in.
Jeannie Boyle is director and chartered financial planner at EQ Investors
