There is a certain flair with the term impact investing. Betraying the idea of usual anti-capitalist political activism by creating continuous socially beneficial corporate actions, it doesn’t think that the market is innately flawed in nature but rather sees its importance and role in crafting sustainable solutions.
Similar to your usual investor, an impact investor wants to be a contributor in achieving a wide array of socially relevant objectives that the market itself can’t seem to satisfy. But unlike the usual investors who believe in a company simply to increase financial returns, impact investors want something more long-lasting: a positive change in the society that can create waves of continuous impact, even if it means getting back a reduced financial return.
Another difference is how impact investors, with their investments, will most likely dictate the overall flow of the market and its corporate decision makers not into their direction but into socially conscious decisions, making sure that it creates a positive impact in the long run. A critical element of progress, shareholders and their active ownership approach with impact investing is one of the biggest ways one can effectively aim to instill some positive changes in corporations not just for their portfolios but also for humanitarian causes.
Quite fitting for its time, shareholders and their role in impact investing are important in engaging companies to be much more socially and environmentally conscious. Investors nowadays simply understood what this current generation demands, contrasting standard investments that concentrate solely on the financial return by inserting the exercise of ethical and social criteria.
Through this, shareholders and the companies they invest in hope to make a substantial impact in the society, all while growing their companies to further make the solutions continuous and sustainable.
Shaping the landscape
One such company that has been making waves in this industry is Exponential, Inc. (XPO2), a young cause-related tech marketing firm mainly focused on impact investing, and how it can open this industry up for more players from all over the world, potentially making a sustainable form of social change. Currently supporting over 10 non-government organizations (NGOs) within the first three months of operation, this company has already been making more than ripples, with plans to build more partnerships and extend support to over 10,000 organizations by 2023.
VIsit Innovation Enterprise's Chief Innovation Officer Summit in London October 3–4, 2018
Founded by French-American entrepreneur, Dom Einhorn, the young firm essentially operates as a crowdfunding platform for various cause-related NGOs from all over the world, giving them a chance to not only get their foot at the door but continuously expand. The firm does this by changing the traditional fundraising system, hosting rewards-based crowdfunding campaigns for various small and medium-scale NGOs and letting consumers buy products from merchant partners. A percentage of the sales for these products becomes “cashless contribution” to the buyer’s chosen NGOs and this is made possible through the browser extension module it pioneered. This system gives the NGOs access to a huge pool of people who are willing to support their causes in exchange for exclusive products and deals.
Through this means, the tech firm effectively makes everyone who partakes an impact investor that directly taps into the market. As mentioned above, shareholders tend to dictate corporations onto making socially responsible decisions, and XPO2 takes that mile ahead by actually giving the shareholders direct access to the NGOs that support a cause they’re interested in. This way, XPO2 and its platform open up so many possibilities in the industry and the world market, especially now that investors are wanting more transparency from the companies they support when it comes to environmental and social performance. Investors want a change, and they want to see what their money goes through to do just that, all well as how much of their money really goes to their cause.
Dynamic historical shifts saw investors switching to investing with a purpose, and this year saw more of them taking the reins and holding the companies accountable for improving their decisions when it comes to social and environmental issues.
There’s a simple reason why the age of information brought about the success of peer-to-peer transactions. And as more people are asking for increased transparency and authenticity, engagement is taking on a more prominent role with regards to impact investing, and spearheading this direction is XPO2 with its NGO fundraising platform. Consumers want a simple process that doesn’t complicate things, and XPO2 solved this by being the middleman without acting like one, serving as a direct portal for consumers and NGOs who need appropriate funding. In line with its mission to support as many NGOs as possible, the company recently launched its highly anticipated new crowdfunding platform.
The company is still in its infancy, but if things continue progressing like this, it won’t be long before XPO2 becomes the global standard when it comes to how corporations and shareholders engage in regards to impact investing.