Impact investing has become increasingly popular within the last decade. The growing impact investment market provides capital to address and help find a solution for the world’s most pressing challenges in sectors such as sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services including housing, healthcare, and education. These investments tackle global challenges that were previously supported by philanthropic donations, which are still important, but missing a monetary return component. Impact investing offers diverse and viable opportunities for investors to advance social and environmental solutions through investments that also produce financial returns.
The Rise of Impact Investing
Ethical investing, socially-responsible investing, high-road investing, or impact investing are all terms related to investing for positive change. According to Investopedia, millennials have stepped up to lead the charge. Although making money is a common goal, these investors are most concerned about making a positive impact on the world. And with the $59 trillion they are projected to inherit, young investors will have the assets to do it.
In fact, from when research within this space began in 1995 to 2014, socially responsible investing (SRI) assets under management exhibited a 929% increase—a 13.1% compounded annual growth rate—according to the Forum for Sustainable and Responsible Investment Foundation (US SIF). For recent years, the growth rate is even higher: 18% compounded annually from 2013 to 2015, says The Global Impact Investing Network (GINN). By 2016, SRI assets had mushroomed to $8.72 Trillion—a 33% increase over 2014, noted in the US SIF’s biennial report, US Sustainable, Responsible and Impact Investing Trends 2016.
Agriculture as an Impact Investment
World hunger and food security remain pressing issues. Agriculture as an impact investment can facilitate solutions to this problem, while producing many benefits to the investor. Agricultural production is one of the oldest, most profitable investments available. With each passing year, the world must feed more people with less arable land. Global demographics will continue those trends as the earth's population grows by another three billion people in the next few decades.
Investing in agriculture helps farmers produce food, fuel, and fiber to help keep the world fed, clothed and housed. Moreover, impact investment in agriculture can go towards expanding operations on a farm or ranch, and keep family farms viable in an environment that is increasingly facing global competition from industrial-scale agriculture.