The book “Investing with a purpose” provides a comprehensive guide to impact investing, which aims to generate positive social and environmental impact alongside financial returns. In an era where more investors want to align investments with personal values, this book makes a compelling case for how impact investing can benefit both society and investors. Spanning over 300 pages, the book examines the rise of impact investing, profiles leading impact investors, provides a framework for portfolio construction, and shares insights from the author’s decades of experience.
The rise of impact investing and its potential
The opening chapters provide an overview of the impact investing landscape, tracing its origins to foundations and development finance institutions but noting recent growth in interest from mainstream investors. Unlike conventional investing which focuses solely on financial returns, impact investing considers social and environmental factors equally important investment criteria. The book cites numerous statistics to showcase the growing investor appetite – one in four dollars under professional management in the US is invested sustainably, while global sustainable investments reached $30 trillion in 2019. Looking ahead, the book makes a case for how impact investing could channel trillions of dollars towards urgent global issues like climate change, healthcare access, gender equity over the coming decades if the trend accelerates.
Profiles of pioneering impact investors
Through several examples, the book illustrates how foundations, pension funds, investment managers and corporations have incorporated impact investing in their portfolios. This includes seasoned players like the Rockefeller Foundation which committed 10% of its endowment to impact in 2007, mainstream investors like TIAA-CREF with over $1 billion in impact investments, and corporations like AutoNation which invested $300 million from its pension fund into community development projects. By showcasing first movers across the institutional investment spectrum, it builds conviction that impact investing has moved beyind its niche status.
A framework for constructing an impact portfolio
Drawing on the author’s advisory experience, the book provides a step-by-step guide for investors interested in exploring impact investing, covering: figuring out impact goals/risk appetite, selecting investment types (e.g. listed equity, private debt), finding aligning fund managers, undertaking due diligence, defining an impact thesis and monitoring impact KPIs post-investment. This framework aims to reduce perceived complexity for newcomers, and should help mainstream investors dip their toes in.
Insights from an impact investing veteran
As one of the early proponents of impact investing since 2000, co-author Ronald Cohen shares relevant learnings from his investing and policy career across chapters. This includes insight on bridging differing investor perspectives on impact vs financial returns, overcoming initial skepticism from traditional investors, suggestions for policy reform to funnel more capital, as well as tips for investors starting out. By blending informational chapters with personal anecdotes, the book feels both rigorous and relatable.
Overall the book makes a convincing case for impact investing’s potential and provides a solid introductory guide to the practice. With rising investor demand for socially conscious offerings plus supporting policy tailwinds, the book envisions impact investing progressing towards the investment mainstream within the next decade.