Against the backdrop of climate change, pollution and social inequality, more people are turning to investment strategies that aim to have a positive impact – as well as generating financial returns. It’s an approach known as ‘Impact Investing’.

Between 2018 and 2021, True Bearing – part of the Amber River group of financial planners, recommended and invested over £25m in a variety of impact, sustainable and ethical investments. It’s a striking number – but what lies behind it?

Well, there is a growing desire amongst many investors to make a difference. We all have a greater awareness of issues affecting our planet, whether it’s social injustice, climate change, environmental destruction, hunger, disease – and even corruption. Most of us have already taken personal action to change our own behaviour, like recycling, choosing locally or ethically-sourced goods, upcycling or buying second-hand, or buying from companies that prioritise ethical values and behave responsibly.

Many people are extending this mindful approach to how they choose to manage their investments. According to a study by Morgan Stanley, 84% of individual investors said they are interested in using their money to affect social and environmental change.

It's about doing good and making money in the process

What is Impact Investing?

Impact Investing is all about investing in businesses or projects that create a financial return and have a positive, measurable, social, and environmental impact on the world. It’s about doing good and making money in the process.

And it’s not just a choice for private equity billionaires. It can include the kinds of investment decisions regular investors make, like buying stocks and shares or investing in an ISA or pension.

Does Impact Investing result in lower returns?

Impact Investments are growing in popularity, but many people still think that investing to generate positive environmental and social impact means sacrificing financial gains.

According to Audrey Choi, Morgan Stanley’s Chief Sustainability Officer, 53% of people worry that investing in line with their beliefs means earning less. But she goes on to explain that this simply isn’t the case.

“Evidence shows that companies that perform well on material environmental, social and governance factors outperform their peers.”

However, just like any investment, it’s important to remember that their value can go down as well as up and you may not get back the amount you originally invested.

An Impact Investment might include renewable energy, electric car manufacturers, or sustainable food producers

What does an Impact Investment look like?

An Impact Investment might target companies, industries or funds that align with a positive social or environmental impact. Examples might include the renewable energy industry, electric car manufacturers, or sustainable food producers.

The following example, which should not be considered a recommendation to invest, highlights one UK-based business that’s making a difference:

MacRebur is a UK-based manufacturing company that has developed a new surface type for roads using waste plastic.

Its mission is twofold; to help solve the waste plastic epidemic and make road surfaces more durable.

Their product is produced by taking waste plastic (carrier bags, bottles, and even nappies) and breaking it down into small pellets. An activator is added, which binds the plastics with asphalt.

There are a number of benefits to this technology, the primary one being that it reduces the amount of waste plastic going to landfill.

According to the manufacturer, the plastic within the asphalt gives better resistance to the contraction and expansion of the surface due to changing temperatures, thereby reducing cracks and potholes.

And if that wasn’t enough, the overall process also reduces the amount of bitumen used in making roads, reducing the use of fossil fuels and carbon emissions.

Amber River – Helping you achieve your investment goals

Impact Investments are not only a way of investing in emerging or established companies with clever ideas about how to change the world, they are a way of contributing to a more sustainable future for all of us.

More reading: Should I be thinking about sustainable investing?

Amber River’s financial planners, located across the country, will be able to assist you with recommending Impact Investment funds, which are made up of companies like MacRebur that aim to have a positive impact as well as delivering financial returns.

Get in touch

To speak to one of our team, arrange an appointment or find out more, call 0800 915 0000, or alternatively use our contact form here.