What is impact investing?

In this episode, Clare is joined by Damian Payiatakis, Barclays’ Head of Impact Investing, to discuss what it means and some of the reasons why investors are exploring this approach.

The value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek independent advice.

Clare: Hello, I'm Clare, and welcome back to Smart Investor the series that helps you get to grips with investing. With a growing emphasis on how we tackle environmental challenges, have you ever considered how your investments would influence, or could be influenced by the world around you? It's something more and more of us are thinking about and to discuss it in more detail, I'm joined by Damian Payiatakis, who's head of impact investing at Barclays. Damian, thanks for joining me, so you can you just explain what impact investing is?

Damian: At Barclays, we see impact investing as investing intentionally, to generate both financial returns and a societal impact, and that is both to protect the greater assets, as well as to make a positive contribution to our world. So let me explain that in a bit more detail. So, first, it's investing. We're putting our capital at risk, which means that we could make a return, or we could get back less than we put in. But it's intentional about trying to generate an impact and therefore measuring it as well. And we're doing it for those dual aims.

Both the financial returns and the societal impact and without a consideration for a trade-off between the two aspects, and we're doing it also because we're interested to protect and grow our assets. So thinking about impact can help investors to find opportunities, or see risks in their investments and to make a positive contribution to our world. Which means that, investors recognise no matter how big their portfolio is, it has an impact. And they wanna use it to make a difference.

Clare: So why do you think it is becoming more popular at the moment?

Damian: Just as that we see people more interested in how they live, what they eat, where they shop we also see investors being more conscious of the impact that their investments are generating. And when you think about it we face urgent societal challenges. Climate change, gender inequality, structural unemployment and addressing these issues has consequences for us both as people and investors.

As investors, if we're thinking about the implications these issues have on our portfolio then we can make better investment decisions. Or, as investors, if we really care about a specific social or environmental challenge, then using our capital could help to address these issues.

Clare: So for someone who's really interested in this and wants to do it, how can you invest with impact?

Damian: Well first, ask yourself a question. Do I want my wealth to have an impact? If the answer is yes, then it's about finding the right options for you. The good news is, there's no single approach to impact investing, and no single impact investment type. There's a range of options across asset classes that are available to investors. And on the Smart Investor side, to make it easier for investors, what we've done is we've started to identify the funds that are using different approaches to impact investing.

And for those who don't want to go through the process of picking stocks, or bonds, or funds, what we've done is we've also created the Barclays Multi-Impact Growth Fund, which blends together a range of areas impact investment funds. But what's fundamentally important is that question of how you want your wealth to have an impact and what investment options are right for you.

Clare: Thanks Damian, that's really interesting and lots of food for thought there. There's lots more information about impact investing on our website, which should help you improve your knowledge and understanding even further. Thanks for watching, and we'll see you next time.

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