Impact investing is an innovative and growing area for investing, where we see both increasing client interest and investment opportunities.
Around the world, we face urgent challenges – climate change, aging populations, structural inequalities, and chronic diseases amongst many others.
These complex issues will require trillions of investment and a more innovative approach to addressing these seismic challenges presents both significant risks and opportunities, for us as people and for us as investors, into initiatives that are solving these challenges, so investors have the opportunity to grow their assets world’s most pressing problems.
The other is that more investors are aware and interested in the impact their capital is making.
Just as we’ve seen more people be interested in how they shop, what they eat, how they live, as well as the effects these purchases have more broadly on people and the environment, we see investors cognizant about the impact their investments generate.
These two trends together support the emergence of impact investing.
At Barclays, we consider impact investing to be: “Investing to intentionally generate financial returns and social impact to both grow and protect your assets and to make a positive contribution to our world.”
Let’s take a closer look at that explanation and break it down a little.
First, it’s investing – that is, we’re putting capital at risk.
Impact investments perform financially like any other investment: some meet their targeted returns, some don’t, and some exceed those initial targets.
Next, it’s intentional about trying to produce impact, which generally means bringing the considerations of impact deep into the investment process, and/or targeting specific outcomes, also means is measuring it.
Impact investments measure and report on the impact they generate.
After this, impact investing is about dual aims – There’s no need to trade-off between these.
Investors have to give up returns to have an impact.
In the field to dispel this myth.
And finally, when we look at why investors are interested, it’s for two reasons.
First they are seeking to protect and grow their assets.
Thinking about impact helps to identify risks to their investments as well as new opportunities for investment.
Secondly they’re seeking to make a positive contribution to our world – recognising that their capital, no matter how large or small, does have an impact and they want to capitalise on the potential that their wealth has to make a difference.
We believe we can use our strength and expertise around investing and advising investors to find opportunities that enable clients and the world to do well.
By providing finance in a rigorous and economically sustainable way investors can receive a return and society benefits from the changes the capital facilitates.
Looking ahead, we are excited to help clients explore these new possibilities.