Impact Investing is an approach to investing that seeks to provide investors with a financial return by solving social or environmental problems or challenges or by generating measurable social and environmental impact, or creating positive social change. But what do we mean by “social problem,” “impact,” or “positive social change”?
In answer to this question, I developed a concept of impact called Access to Essential Resources to improve upon the ambiguity of impact and to describe impact in terms that relate to specific actions and activities that we could observe and experience in real life.
To survive, to be happy, to thrive, and to feel fulfilled, there are certain things in life we all want and need. We need food and clean water to drink to satiate our hunger and thirst. We need shelter and clothing to protect us from the elements, and health care or remedies to protect or treat us for changes in our health such as injury, illness, and disease. We need stories, images, and sounds to express ourselves and to connect with others, and transportation to connect us from place to place. We need information from all sorts of sources to make decisions. We need money or some form of currency with which we can exchange or barter to get other things we want and need in life. I refer to these things in life we all want and need as Essential Resources and they can be categorized into six groups: want and need
- Sustenance: Essential Resources to Sustain Ourselves
- Expression: Essential Resources to Communicate and Express Ourselves
- Connection: Essential Resources to Connect and Develop Relationships with Others
- Managing Change: Essential Resources to Prepare For, Experience, and Manage Change
- Making Decisions: Essential Resources to Make Decisions and Taking Action
- Means of Exchange: Essential Resources for Exchange to obtain other Essential Resources we need
In my opinion, people become more empowered when they have the Essential Resources they need to sustain and express themselves, connect with others, manage change, make decisions, and as a means of exchange. Growing up, my immigrant parents could barely speak English, and with the little money they had, they ensured that our family had a roof over our heads and food on our plates. We had access to sufficient Essential Resources such that we had good health care, means of connection (a car), and most important for my sister and I, access to a good education.
Access to Essential Resources can vary. The following are the six types of Access to Essential Resources:
- Basic access to resources
- more Efficient access to resources
- access to more or better Choices of resources (greener, healthier, etc.)
- more Convenient access to resources
- through the Supply Chain
- through Employment
More equal societies result from people having improved access to the Essential Resources they need to do the things in life to survive, thrive, and be happy. For example, if someone does not have access to food, clean water, or a home, giving them basic access to these things, which are Essential Resources of Sustenance, is an improvement in their well-being and a positive impact in their life.
If someone has basic access to transportation, for example a bicycle, giving him or her access to a public transit system, that is Efficient access because having access to public transit gives more choice and access to a mode of transportation and connection that can be more convenient and faster. This is an improvement and a positive impact over just having access to a bicycle alone.
One way in which I describe Impact Investing is an approach to investing that “takes care of the village.” This idea ensures that all members of the village have the Access to Essential Resources they want and need. In our economy and society, businesses play an important role in providing people with Access to Essential Resources. This concept of investing in businesses so that people can become more empowered and societies can become more equal through improved Access to Essential Resources is, in my opinion, the impact of impact investing.
What Essential Resources do you think make the biggest impact in the world if people could access them? Tweet your thoughts with #EssentialResources.
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More tips and tools for getting started in impact investing can be found in Integrated Investing: Impact Investing with Head, Heart, Body, and Soul – available at all major online book retailers including Amazon.
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