Investing in Socially Responsible Investments (SRI), “green” or “ethical” investments have become a favourite amongst investors.
According to a recent report titled Impact Investing in Emerging Markets, by the consultancy Responsible Research SRI has become more attractive to fund managers, private equity companies and retail investors worldwide. The main change towards greener investing is the compelling returns accompanied by the social impact of the investments.
A research report by the Global Impact Investing Network found investors anticipate a return of between 20- 25% for 2011 on their interest in impact companies working in particular with emerging markets.
WillowTree has raised cash from investors around the world and has nearly reached its target of US$80 million. These funds will be used to take equity stakes in companies involved in education, health, food, poverty alleviation and community development. Nic Farah, another founder says, “If you roll out a map of the region and put a compass point on Dubai and draw a four-hour plane ride around the emirate, you capture a third of the world’s population”. This is why the private equity fund will focus the funds on the Middle East, North Africa and South Asia.
Impact investing has experienced a shift in recent years. Previously, retail and professional investors would build a portfolio by excluding certain companies involved in what some would deem unethical industries, such as tobacco, deforestation or pornography.
Now, socially conscious investors prefer investments in projects that sustain and build economies, such as microfinance companies and medical institutions.