Impact investing has become
increasingly popular over the past few years as more and more people realize
its potential to have a positive impact on the world.
However, many people still
don't understand what impact investing is or how it works.
Therefore, the purpose of this
article is to clearly define impact investing and its potential impacts on
society.
Impact investing can help
disadvantaged people by adding more money to the economy.
This happens when investors
finance companies that employ people who would not have jobs without outside
investment.
For example, investors are
financing technology companies in Ghana so that rural workers can earn a
living.
In doing so, they contribute
to reducing poverty in their country by increasing employment.
The higher wages for these
jobs allow families to better feed and care for their children.
Moreover, the said investors
are also funding health care initiatives so that the villagers have access to
free medical care.
These impact investments go
beyond mere financial gain and actually improve the lives of those living in
poverty.
Impact investing can also help
the environment by creating jobs and conserving natural resources.
These investments are often
made in green industries such as renewable energy or sustainable agriculture.
For example, an American
company has invested in solar panels that power communities in Africa;
Allowing them to generate
their own electricity and earn money to pay their workers better than the
government would.
Companies that use impact
investing invest in projects that create jobs, such as building homes and
schools.
In doing so, they help the
planet by conserving natural resources like solar or wind energy.
They also create jobs for
people who otherwise would not have jobs and earn fair wages for their work.
Social enterprises use their
profits to fund social causes such as job training for ex-convicts.
It's a great way to provide job
training to people who would otherwise have no way of earning an income.
Social enterprises focus their
investments on training people who have been incarcerated or otherwise excluded
from the labor market due to a criminal past.
By helping them gain skills
and work experience, they can reintegrate into society and become positive role
models for others.
In addition, many social
enterprises offer health insurance so that employees can pay for medical care
when injured on the job.
By providing these benefits,
social enterprises demonstrate accountability to their employees and help
ensure that their employees stay healthy and happy at work.
When companies use equity
instead of paying fair wages for labor, workers receive little or no
compensation for their efforts.
Additionally, some
unscrupulous employers will overcharge their employees and pay them little or
nothing for their efforts; exploiting them instead of helping them succeed
financially or socially.
Government initiatives often
overshadow private impact investment projects.
Governments already have
enough power to easily overcome most private projects created by impact
investing.
For example, governments can
easily fund social programs like schools or hospitals through taxation or other
sources of revenue.
In addition, governments can
easily enforce regulations against exploitative practices such as paying less
than fair value wages or treating employees poorly.
While there are some ethical
companies, many dishonest companies overcharge customers while underpaying
their employees so that they can pay less than fair labor prices as long as
they treat their workers well enough.
Overall, impact investing has
the potential to have a positive impact on society as it creates jobs, funds
green businesses and helps people escape poverty through investments in
environmental programs education or vocational training.
The key is to find companies
willing to responsibly incorporate ethical practices into their business models
so that disadvantaged people and honest businesses thrive.
