Impact investing is an extension of socially responsible investment, focusing on companies that promote environmental sustainability, social justice, and corporate ethics and other ethical and social responsibility awareness. Impact investing goes a step further and actively seeks investments that can produce significant and positive impacts.
Impact investing focuses on investing in companies or organizations to create measurable social benefits while still generating favorable financial returns. Impact investing usually revolves around solving social problems (such as poverty or education) or environmental problems (such as clean water).
As of the time of publication, the top five impact investment companies by assets under management are Vital Capital Fund, Triodos Investment Management, The Reinvestment Fund, BlueOrchard Finance SA and Community Reinvestment Fund, USA.
The U.S. Department of Labor issued a new regulation in late October 2020 that may restrict or cancel socially responsible investments in retirement plans. Although the rule has been revised to remove explicit references to environmental, social and governance (ESG) factors, it requires trustees of retirement plans to choose investment strategies based solely on how these strategies affect financial performance. The ruling may have a significant impact on funds and investments classified as ESG and socially responsible investments.
Important capital fund
Vital Capital Fund is a private equity fund with assets of approximately US$350 million.The fund invests in developing regions, mainly sub-Saharan Africa, and aims to improve the quality of life in enterprises and projects, and provide a considerable return on investment.The main investment focus of Vital Capital Fund is the development of infrastructure, housing projects, agro-industrial projects, renewable energy, healthcare and education. The fund’s investments include Luanda Medical Center in Angola and WaterHealth International.
Triodos Investment Management Company
Triodos Investment Management is a subsidiary of Triodos Bank, headquartered in the Netherlands, which manages more than a dozen sustainable investment funds. Since 1995, Triodos has been actively engaged in impact investing and has approximately US$5 billion in assets as of launch.ofThe main areas of focus include renewable energy, sustainable food and agriculture (including organic agriculture), healthcare and education.Triodos is one of the founding members of the Global Impact Investment Network.Its investments are in Europe, South America, Africa, India and Southeast Asia.
Headquartered in Philadelphia, Pennsylvania, the Reinvestment Fund is a non-profit community development financial institution. As of the time of publication, the assets under management of the fund are estimated to be 1.2 billion U.S. dollars to provide funding for housing projects, health care, education programs, and employment programs. It mainly operates by helping troubled towns and communities in the United States. It also provides public policy advice and data analysis services for American cities to assist in the development of community plans.
BlueOrchard Finance SA
BlueOrchard Finance has a main office in Switzerland and operates in more than 80 emerging and frontier markets around the world, including Asia, Latin America, Africa and Eastern Europe. As part of the United Nations initiative in 2001, BlueOrchard Finance was established as the world’s first commercial management company for microfinance debt investment. As of the time of publication, BlueOrchard has invested more than 200 million entrepreneurs worldwide. It provides debt and equity financing for businesses and institutions, with a focus on reducing hunger and poverty, fostering entrepreneurship, establishing food production and education programs, and working to address climate change issues.BlueOrchard Finance manages approximately US$3.5 billion in assets.
American Community Reinvestment Fund
The American Community Reinvestment Fund was established in 1988 and is located in Minneapolis, Minnesota. It is a nationally certified non-profit community development financial institution. Its mission is to empower people to improve their lives and communities. The Community Reinvestment Fund cooperates with local private lending institutions to provide financing for community development projects. These include small business loans that are used to grow the business, expand the number of employees, or improve energy efficiency.But with more than 250 million U.S. dollars in assets and additional long-term loan capital obtained through the community development financial institution’s bond guarantee program, community reinvestment funds also provide community housing projects, health care centers, charter schools, day care centers, and small businesses.