Research regularly suggests that large numbers of investors are interested in the idea that their money could be put to use so that it has a positive impact on society and the world, as well as earning them a financial return. So why is it so few are actually doing it?
Barclays Bank research suggests 54 percent of investors feel this way, while a separate Morgan Stanley study puts the figure at 71 percent; amongst the millennial generation meanwhile, the latter research put interest levels at 84 percent.
So what stops people putting their money where their mouths are? Just nine percent of investors have actually made social impact investments according to the study. In which case, a shortage of capital may be holding back commercially viable small and medium-sized enterprises that would otherwise be able to make a positive contribution to society.
In truth, there appear to be two problems. One is that investors believe impact investment necessitates the sacrifice of at least some financial return – that they’ll earn less from investments that are designed to do good. Second, impact investment is seen as a standalone asset class – rather than investors looking for equity or fixed-income assets with an impact context, they assume social impact has to be separately accessed elsewhere.
However, recent research by the investment analysts at All Street provides yet more evidence that both those assumptions are incorrect.