The field of “investments intended to create positive social and/or environmental impact alongside financial return” is expanding every day, so it’s tricky to stay up on the lingo. Here’s a list of some key terms.
Assets. Sources such as JP Morgan estimate there will be at least $500 billion in impact investments in the next ten years. The Investors´ Council of the Global Impact Investing Network (below) already includes 50 investors that each hold more $50 million in impact investment assets. Angelinvestors are playing a key role in developing this new market. “And.” The great beauty of impact investing it the possibility to do good AND make money at the same time. In fact, for many of the best impact investments, the more you sell, the more good you do, because the social purpose is embedded in the business model. For Vision Spring, for example, the more very low-cost eyeglass they sell, the better the organization accomplishes its mission of improving the productivity and quality of life of the poor in the developing world. For Root Capital, the more loans they disburse, the more they fulfill their social purpose of growing rural prosperity.
Benefit Corporation is a new legal structure for companies which create a material positive impact on society and the environment, consider non-financial interests when making decisions, and report on their overall social and environmental performance using recognized third party standards. Today 11 states have benefit corporation legislation and 11 more states on working it. Patagonia was the first Benefit Corp to be registered in California. B Corp certification is voluntary certification that companies have met the rigorous standards of social and environmental performance, accountability, and transparency set and reviewed by the nonprofit B Lab.