Impact Investing -- Gains for the Greater Good

By Andre J. Peschong of Deal Flow Diaries.com

Impact investing, or investing to generate a positive environmental or social return along with a financial one, is a term that had been thrown around in the financial world for quite some time. It is investing in three dimensions: factoring in the potential risk and return along with effect -- what your money does in the world, its effect on the planet and its people.

Initially, I was somewhat confused as to the underlying motive for this type of investing. In one sense it has a financially driven purpose, thus "investing," but it has that social aspect as well. It's similar to buying a Prius -- you buy it because gas prices are high and you would save money because the mileage is better. Conversely, owning a Prius is almost as much of a statement about what you are about than the actual economics of saving money on fuel.

There are iterations of this impact investing that have been around for years like socially conscious investing, micro-finance investing and certain religious themed funds such as ones in various middle eastern countries where the laws of Sharia dictate what companies funds can invest in.

I needed to better understand this new market and how it is growing, changing and establishing itself in the traditional investment world. Kevin Jones of Social Capital Markets and a partner at Good Fund was kind enough to spend a little time helping me glean some insight into this investment style. (For the full interview with Kevin Jones, click here.)