Impact investments: learn about the different types and learn how to invest

In a scenario of both national and global instability, in which political and economic uncertainties and the global environmental crisis add up to disorient the direction of capital, investors tend to feel insecure in relation to the direction they should give their resources, right? ? Because it was in this environment that an alternative emerged that has increasingly attracted the attention of investors and entrepreneurs: positive impact investing.

As a result of a succession of historical landmarks that were altering the course of capitalism? such as ECO-92, which established a division between environmental impact and business results, the predatory global financial crisis of 2008 and the establishment of the 2030 Agenda with the 17 Sustainable Development Goals (SDGs) by the UN -, the applications of positive impact are considered the first fruits of the so-called ?purpose capitalism?. This is because they bring together, in the same initiative, profitability and measurable impact on social and environmental projects. 

Impact investing x social investment x green investment

According to the Global Impact Investing Network (GIIN, an entity that brings together global investors and disseminates the purposes of this type of investment), the amount and diversity of capital for impact investing has increased significantly over the last ten years. The global impact investing market is currently estimated at US$ 715 billion.

The numbers are encouraging, but an investor who wants to make his incursions into this new world of investments is soon faced with some doubts: after all, what characterizes an impact investment and what is its difference from social investments and the so-called ?green investments? , so vaunted lately?

The social investment is the allocation of resources made by a private company in actions of social and/or environmental responsibility, in accordance with its corporate values and its business area. It aims to add value to the brand and, according to the Federation of Industries of Rio de Janeiro (FIRJAN), it also ?increases consumer loyalty, increases the ability to recruit and retain talent, improves the organizational climate and makes the company subject to the process of social transformation of the country?.

already the green investments are those that focus on economic activities that promote sustainability. But this is a recent concept. In December 2019 alone, the European Commission agreed with the European Parliament and the European Council to create the first system of classification of sustainable economic activities, precisely with the aim of attracting a greater flow of capital from investors in an organized manner. Among the criteria chosen by the EC are: the mitigation of climate change, the sustainable use and protection of water resources, the transition to or adoption of a circular economy, pollution control and the protection and restoration of biodiversity and ecosystems.

sustainable and profitable

You positive impact investments they are, in turn, the pulley that allows the movement of this new gear aimed at sustainable economic activity, but without losing focus on profitability. 

According to Stuart L. Hart, in the book ?Business with socio-environmental impact in Brazil?, published by FGV Editora, ?the organizations and entrepreneurs that will be successful in their future will be those that focus their people's creative energies on solving social problems and urgent environmental issues we face now?. 

In this growing context of diversification of investment models, the demand for mechanisms that facilitate these operations has also grown, aiming to directly support businesses and impact entrepreneurs. A Sitawi Collective Loan Platform was created in 2019 to solve this gap and promote the democratization of impact investing, creating fundraising opportunities for organizations with the purpose of generating positive social and/or environmental impact.

Want to know more about it and become an impact investor? Register on our platform  and stay on top of all impact investing opportunities from Sitawi.

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