Im­pact In­vest­ing

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Im­pact in­vest­ing refers to in­vest­ments that are done with the in­ten­tion of cre­at­ing so­cial and en­vi­ron­men­tal good. It means that at the core of it, you need to have that so­cial change and en­vi­ron­men­tal change in a pos­i­tive way, to hap­pen with that in­vest­ment.

So, just like any other mar­ket, you need the sup­ply side of the cap­i­tal. You need the de­mand side of cap­i­tal. You need plat­forms for them to come to­gether. And you need struc­tures to come to­gether.… I came out of Smith [Col­lege] for my un­der­grad­u­ate­and­joinedMor­gan Stan­ley. You have to re­mem­ber, in those days, there were very few women in Wall Street, let alone any­one from Bangladesh, where I’m orig­i­nally from. Then I went and joined this bank called Grameen Bank [in Bangladesh], which even­tu­ally got a No­bel Prize. Grameen Bank was do­ing this whole prac­tice of mi­cro­fi­nance: giv­ing very small loans to ru­ral women to start up their busi­ness. This is back in 1991-92.… Later, I started my first com­pany, which was a global mar­ket­place for hand­made goods. I grew it and sold it to Na­tional Geo­graphic. One of the big lessons for me there was how dif­fi­cult it was to have a com­pany that had a so­cial side. The in­vestor didn’t care about the so­cial side.

Be­cause, if you think about it, what­didMil­tonFried­mansay? Mil­ton Fried­man said, ba­si­cally, as a com­pany, your task is to max­imise profit. That’s what we are taught. But it is re­ally not about max­imis­ing profit. It’s ac­tu­ally max­imis­ing value. And part of the value is what good you’re do­ing to so­ci­ety.

From “Why Im­pact In­vest­ing Needs to Go Main­stream”

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