What is Impact Investing?

What is Impact Investing?

There are many polluting power plants and operations funded by investors and funds. Billions of dollars are invested in harmful activities for investment purposes. Tons and tons of CO2 and toxins make their way from these operations into the atmosphere and ground, warming the climate and poisoning innocent people. According to Georgia Public Broadcasting, there are towns in which coal power plant waste comes in contact with their water wells, leading to an extremely concentrated amount of carcinogens in their water. In fact, the levels of carcinogens like hexavalent chromium are several times higher than California’s mandates. Why do companies put people at risk to make money? In this article, I will provide a new solution rapidly gaining ground with large investors.

In this capitalist society, investors fund companies which in turn make a profit for investors. Many billions of dollars find their way into funding these companies. Luckily, there is a solution. Have you ever wondered if you can make money while doing good for the world? That is what impact investing is! Investors can make money while investing in companies with a mission to make the world a better place. Because demand for clean energy and energy storage is going up, green energy companies are making more profits which makes investors money. As these companies grow, they also crowd out fossil fuel companies. What this means is that investors can make passive income while fighting climate change, with no labor involved!

Unfortunately, private investors are not the only people who invest in fossil fuels. Governments around the world invest hundreds of billions of dollars every year into fossil fuels. This is simply because fossil fuels are necessary for most aspects of our society. Luckily, there are many new technologies coming out that can replace these fossil fuels. Investors can use impact investing to fund these companies to provide sustainable alternatives, with the ultimate goal to be cheaper than fossil fuels. We are already gaining ground on this. In many states, solar energy is cheaper than coal. According to NPR, a coal museum in Kentucky switched to solar energy “because it’s cheaper.”

How does this impact our lives? First of all, investors can breathe a sigh of relief knowing that they can make money without conflicting their conscience. Secondly, investing in growing green companies shows that there is a demand for their products, and also helps the company grow faster. Finally, impact investing helps green companies compete with dirtier ones. There are still many problems with impact investing that need to be fixed. Luckily, we can make a difference!

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