By promoting this form of investment, investing companies have the potential of also financially benefiting from exercising socially responsible practices. Depending on the invested location, the financial returns in the form of profit can be attained sooner than expected. This was proven by a study conducted by Global Impact Investing Network (GIIN) (2018), they identified that over 90% of investments made by impact investors surpassed their expected projections (Reisman, Olazabal, & Hoffman, 2018). Though numerous established companies may view this as a financial risk, it has mainly appealed greatly to the younger generation. With the notion of, “wanting to give back to society,” as described by Höchstädter & Scheck (2018), millennial impact investors are using the publicity from the positive social impact of their investment to increase financial support to the numerous projects (Höchstädter & Scheck, 2018). When the entire strategy is viewed in the long-term, they will have aided in the eradication of poverty, which was one of the main goals of the United Nations.
However, before donating financial support haphazardly, it should be noted that investments vary therefore, investors can choose. In developing countries, there are numerous industries one can invest in such as education, healthcare, agriculture, and energy. If analyzed properly, the industries identified have the greatest potential in helping a region or nation eradicate poverty while boosting economic development (Wysokińska, 2018). The latter potential plays a critical role in ensuring that the aided regions are still capable of maintaining development. This brings about the previously addressed point of microfinance organization. These organizations initially intended to boost women investment have become the main financiers of thousands of projects globally (Wysokińska, 2018). They have aided numerous countries in South East Asia and East Africa boost their economic development.
However, the poor legal infrastructure around these organizations has resulted in some of the highest debt crises that have even resulted in numerous suicides in India. This is mainly because the majority of these organizations have undertaken investment in these regions on with the notion of financial return. Though both for- and non-profit organizations provide opportunities for the poor, the real issue that would need to be addressed as the alignment of agendas. To eradicate poverty, investments will take a long period before becoming profitable. Additionally, the main purpose if investing in these regions is for social and environmental impacts. This understanding of how the world works and how I can play a part in improving it has created doubts in my current career plans.
References
Dichter, S. The Generosity Experiment. Retrieved 20 September 2019, from https://www.ted.com/talks/sasha_dichter
Höchstädter, A. K., & Scheck, B. (2015). What’s in a name: An analysis of impact investing understandings by academics and practitioners. Journal of Business Ethics, 132(2), 449-475.
Koh, H., Karamchandani, A., & Katz, R. (2019). From blueprint to scale: The case for philanthropy in impact investing. Gates Open Res, 3.
Reisman, J., Olazabal, V., & Hoffman, S. (2018). Putting the “Impact” in Impact Investing: The Rising Demand for Data and Evidence of Social Outcomes. American Journal of Evaluation, 39(3), 389-395.
Wysokińska, Z. (2017). Millenium development goals/UN and sustainable development goals/UN as instruments for realising sustainable development concept in the global economy. Comparative Economic Research, 20(1), 101-118.
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