Do your clients align their values and their investments? In other words, do they engage in impact investing?
If they don’t, they likely to have some predictable reasons for not jumping in. Their objections may be along the lines of:
- “Impact investing is a distraction. When I’m investing, my focus is on getting the best return. Period.”
- “I’m a philanthropic person, but I prefer to drive impact through charitable giving rather than through investing.”
- “I just don’t want to deal with the risk inherent in this category of investment.”
All of these reasons are reasonable! However, there’s a way of looking at impact investing that can make even the most skeptical person willing to take a second look.
Our guide is Justin Rockefeller. Because of his “I’ve-lived-it” experience and track record of helping impact investors share experiences, he is someone to listen to.
What Is Impact Investing?
Impact investing means investing in ways that positively serve society. As Rockefeller points out, “Every institution and every individual has tools for effecting change, including the investments we make.”
To see impact investment in action, Rockefeller gives the example of Zero Mass Water. The company addresses one of the major needs in this world today: access to clean drinking water.
People currently consume roughly 465 billion liters of bottled water each year. As Rockefeller points out, “Ninety-five percent of the world’s consumption of bottled water is a rational choice; People buy those plastic bottles when they can’t reliably and conveniently access clean water.”
Unfortunately, the production and disposal of plastic bottles from bottled water releases greenhouse gases. An estimated 2% of global totals for greenhouse gases come from plastic waste.
How Can the Problem Be Solved?
Cody Friesen, a professor at Arizona State University, invented the Hydropanel. This device uses solar power to gather water from the humidity in the air. Air, it turns out, is an almost unlimited resource for providing pure drinking water.
Hydropanels work alone or in arrays. Once the water is taken from the air, it’s mineralized and stored in tanks. Solar power then pumps clean water through pipes to the end user’s sink faucet.
As Rockefeller points out, “The only inputs are sunshine and air. The process is both pollution-free and pays for itself economically. It also creates repurposed human capital – no more sending women and children to fetch questionable water from kilometers away.”
Rockefeller is enthusiastic about the social impact. In addition to avoiding the pollution caused by making and disposing of almost half a trillion plastic bottles, there are extraordinary health benefits for the individuals who no longer will suffer from water-borne diseases.
Zero Mass Water has already commercialized its product, and the hydropanels are in use in 23 countries. For Rockefeller, the company is a case study in aligning values and investments.
It meets three important criteria that impact investing is really good at dealing with:
- The problem is important.
- The problem is solvable.
- The problem is relatively neglected.
What About the Returns?
Rockefeller is quick to point out that your experience with impact investing will depend on the company you invest in. As with any investment, you could lose all of it or some of it.
Still, the odds of doing well through choosing to invest in companies that are beneficial to the world appear to be at least as good as the odds for traditional investing, and possibly better.
Rockefeller believes that, “In order to address some of the global challenges that seem intractable, such as climate change, poverty, and access to basics such as water, food, health, education, and opportunity, we need funding and innovation on the scale that capital markets provide.”
How about suggesting to your clients that they consider impact investing? They can make returns similar to those of traditional investing, but there’s an added benefit. They’ll know that they’re using their wealth in profoundly responsible and moral ways.
Mitzi Perdue is a business owner, speaker and organizer of the Anti-Human Trafficking Auction. Contact her at [email protected] .