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Impact Investing: A Comprehensive Overview

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Comprehensive overview of impact investing, regulation, investors, and initiatives.

An image of a graph showing the growth of impact investing over the past four years.

Impact investing has become increasingly popular in recent years. It is a form of investing that seeks to generate both a financial return and a positive social or environmental impact. For investors, it is a way to make their money work for good and to help create a more sustainable and equitable future. Meanwhile, impact investing—which seeks to not only achieve measurable benefits across ESG but also generate attractive financial returns—has become an increasingly important tool for world-building.

On February 3, 2023, The Brief published an article entitled The Week in Impact investing: Dilemmas. In it, the team at ImpactAlpha discussed the growing interest in impact investing and the dilemmas associated with it. They note that institutional investors have increased sustainable and impact investing activity by 81% over the past four years overall, with significant growth in the latter.

We work with the UN Sustainable Development Goals as a guiding light. We only invest in companies that can demonstrate measurable impact against the UN SDGs, while also providing attractive returns to investors. This includes companies that are working on renewable energy, clean water, sustainable agriculture, and other areas that are essential for a more equitable and prosperous future.

New regulations and evolving invest interest continue to shift the sustainable investing landscape. Large-scale, collaborative approaches are being adopted by investors and governments alike, such as the UN-supported Principles for Responsible invest (PRI). The PRI is a leading proponent of responsible investing across the globe, representing a global network of investors committed to driving positive change in global markets.

It also works to unlock impact investing at scale for another group: investors. Soros encourages investors to cap returns for the sake of impact, showing that it is possible to invest with both a financial and social return. Additionally, new regulations and initiatives such as the EU Sustainable Finance Disclosure Regulation (SFDR) and the UN Sustainable Banking Network (SBN) are driving innovation and encouraging investors to consider their impact.

The Impact investing Newsflow for January 2023 edition, published by ImpactAlpha, highlights notable impact finance deals, impact funds to watch, initiatives and advocacy, and research and insights on impact investing. It is a great resource for investors looking to learn more about the sector, as well as for those looking to invest in impact.

Finally, finance minister, Ms. Niramala Sitharaman, in the latest budget made an announcement that could impact investors who invest in international markets. She announced that foreign portfolio investors (FPIs) would be taxed at a concessional rate of 15% on capital gains. This is a significant step, as it could make investing in international markets more attractive, and thus open up new opportunities for impact investors.

In conclusion, impact investing is an increasingly popular form of investing that seeks to create both a financial and social return. There are a number of initiatives, regulations, and investors that are driving innovation in the sector, and the recent announcement by the finance minister could open up new opportunities for investors.

impact investingesgun sustainable development goalsprinciples for responsible investmenteu sustainable finance disclosure regulationun sustainable banking networkforeign portfolio investors

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