As we build up to our upcoming webinar, this is the second part of two blogs on the basics of corporate impact investing. In part one, we discussed the basics of corporate impact investing. In this blog, we go deeper into impact investing for corporations, covering how it helps you increase your business’s social impact, and how you should approach creating an impact investing strategy.
How can corporate impact investing further your social impact goals?
Impact investments have social and/or environmental benefits as well as financial ones, making them powerful tools for everyone involved. Impact investing can produce large social and environmental benefits because it helps address some of our most pressing issues, and is an effective way of fostering economic development and growth in underdeveloped countries and under-served communities.
For investors, the benefits of impact investing include reduced risk because they can diversify their portfolios and the ability to credibly claim a measurable social or environmental return. It allows public corporations, that are accountable to shareholders, to provide proof of financial viability while increasing investment in social impact. Some corporate foundations are often concerned about shrinking their endowments and thus limit their grantmaking. Because of impact investing, they can leverage a greater proportion of their assets while maintaining or growing their endowments. This in turn helps them communicate an inspiring brand story and attract, retain, and motivate top talent, gaining a competitive advantage over competitors.
There are also strategic benefits, such as a new way of doing business or building goodwill among people in a new market.
How should you launch a corporate impact investing strategy?
Increasing corporate impact investment creates a space where social, financial, and strategic impact all align to create benefits for society. However, getting started can be daunting, and requires buy-in from various stakeholders across your organization. You need to be able to demonstrate to investors or your board that you have a viable, innovative approach to impact investing with multi-faceted returns.
To formulate and implement your corporate impact investing strategy, consider following a simple, four-step process:
- Determine feasibility
Define your objectives and other criteria such as financial or legal parameters.
- Develop a strategy
Select the criteria for the organizations or projects you would like to invest in, such as geographic location, industry/sector, and investment stage.
- Build a portfolio
Select projects or businesses to invest in and do your due diligence into their efficacy.
Develop a plan for how you will implement your corporate impact investing strategy and carry it out.
While the above process might seem relatively simple, each of those steps is quite complicated and requires input from expert impact investors. Learn about these four steps to implement a corporate impact investing strategy by registering for our free webinar featuring impact investing experts Marius Ehrlinspiel from Wider Sense and Ryan Grant Little from RGL Strategic!