Social impact investment

It is not philanthropy or socially responsible investment despite having common goals
inversió impacte social
Nattanan Kanchanaprat on Pixabay

According to Global Impact Investing Network (GIIN), impact investments are those made with the intention of generating a positive, measurable social and environmental impact, together with a financial return. And it is an investment tool that can provide capital to address the world's most pressing challenges in sectors such as sustainable agriculture, renewable energy, conservation, microfinance and affordable and accessible basic services, including housing, health and education

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Although it seems that we might be similar to philanthropy and socially responsible investing (SRI) it is not in its intentionality. Philanthropists do not expect a financial return from their donation. Socially responsible investments have a defined framework and are based on environmental, social and good governance (ESG) criteria but do not have a vocation to create social value, they only want to avoid the negative impact of their investment.

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As José Moncada says in an article in the magazine "Empresa Global", social impact investing invests in companies that put people at the center of their activity and that create a more humane economy.

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But can this type of investment become profitable? GIIN says yes. In the example of Gawa Capital, its return was 6.3 % and with a real impact on more than 210,000 families! Because in cases of social impact investment, not only the economic return on the investment made is measured but also other sectorial and standardized indicators are included to quantify the social return and avoid cases of impact washing.

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And experts predict that it has a long way to go in the future. Since 2007, when this type of investment began to be discussed, it has been growing and doubling year by year. And what's more, it's a model that allows you to bet on a more sustainable, more inclusive, more egalitarian, more social economy without renouncing a fair and adequate profitability.

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Article published in Andorran newspaper on May 25, 2021.

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