Understanding impact investing: opportunities, trends, challenges and risks
There appears to be growing investor interest in impact investing, an investment strategy that seeks to achieve both financial and socio-environmental success.
Impact investing is a form of financial investment that is driven by two objectives, the first financial and the second environmental. In short, investors expect an outcome in terms of both financial return and positive socio-environmental impact. In an interview with the "Focus Risparmio" portal, Marco Lenfers, client portfolio manager of Vontobel's Global Impact Team, spoke of impact investing as a step forward compared to investing according to ESG criteria.
Today, the field of impact investing still has untapped potential. Lenfers identifies one of the conditions that could give this market a decisive boost: standardisation models for assessing the social and environmental impact of companies. On the demand side, Lenfers notes a growing interest across much of the investment world, from asset managers to institutional investors to private clients.
Lenfers emphasises that one of the most important elements of Vontobel's impact investing strategy is to take advantage of the broad range of financial products, in the sense of also drawing on different asset classes: not only equities, but also the constellation of green bonds (green bonds, social bonds, etc.). Without neglecting alternative investments: impact projects that do not take the form of financial instruments listed on the markets and are typically aimed at institutional investors.
As the client portfolio manager of Vontobel's Global Impact Team explains, one of the advantages of impact investing is that it pays a "double dividend", i.e. a financial return and a tangible social and environmental result. Any investor should also consider the risks of impact investing, possibly with the help of a professional. For example, some solutions may not meet your return requirements. Other solutions may prove inefficient or non-transparent in terms of environmental outcomes (think of the risks of greenwashing).
Are you a financial advisor?
Publish your profile for free and find new clients!Fill in your request