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Investing with impact

Put up or shut up?

By Jodi L Morris

“So how was your vacation?”

What started as small talk between friends quickly evolved into a lively discussion. I had recently returned from an econ-tourism trip to Ethiopia, where my group toured a wide range of private companies, including a pasta manufacturer, a private school, a coffee grower and a chemical company.

With each visit, a broader narrative quickly emerged: Small business growth would drive job creation, raise incomes and create a burgeoning middle class. In time, Ethiopia will build out new industries to balance exports and domestic consumption. As the population achieves greater access to education, poverty will decline. In the future, our bewildered grandchildren will ask, “We used to give money to Africa?”

At least, that’s my vision for social change. I’m inspired by children who overcome unimaginable obstacles to obtain an education, and by entrepreneurs seeking to change the narrative of their country by building world-class businesses. I spend my vacation days in Africa. I dedicate my time, talent and charitable giving to a handful of girls’ education and empowerment organizations. I talk and write incessantly about my learnings.

Then it occurred to me. Why wouldn’t I align my investment portfolio with my vision for social change?

If you’ve ever asked yourself the same question, it’s time to start “impact investing.”

Simply put, impact investing is putting your money where your mouth is, investing in companies, organizations, and funds to generate a social or environmental impact and a financial return. You can make impact investments in any asset class: cash, bonds and stocks. They can be in publicly listed or privately held companies or funds. The investments can be in the U.S. or in developing markets.

Impact investments are not an asset class. Don’t expect your financial advisor to present an “impact investment” product to you. Impact investing is a philosophy. It’s a change in mindset, recognizing that your investment portfolio – however large or small – can be a powerful expression of the change you’d like to see in the world.

Defining your intent is the hardest part. Ask yourself: What do I value? What are the problems I want to address? What do I believe about how the world works, and what drives incentives?

My journey began with my belief in girls and entrepreneurs and their impact on the future of Africa. I now implement this belief through private investments. I’ve also parlayed my passion for increased female leadership in corporate America into my investment portfolio. Research shows that companies that have more women on their boards and in senior leadership positions outperform those that don’t. This is known as “gender lens investing.” I own a mutual fund that emphasizes these leading companies, and am working with my advisor to reposition my U.S. stock portfolio around female inclusion.

Every investment choice has an impact.  Why not align the impact with your values?

A FEW QUICK POINTS OF ADVICE

Define your intent. What truly matters to you? Engage your financial advisor. Discussing your intentions should inspire a collaborative approach to decision making.

Do your own homework. Your advisor may have limited impact investing knowledge, particularly in your focus. The Global Impact Investing Network (thegiin.org) and the Handbook for Impact Investing (impacthandbook.com) are great online resources. Get started. Like life, impact investing is an ever-evolving journey. Start with a single step.

JODI L. MORRIS is a CFA® charter holder, Certified Financial Planner® and founder of Connecting-GrowthGlobally.com. She is a guest contributor to the Nob Hill Gazette.

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