High­er, faster, fur­ther — that was once the case. For many decades, our finan­cial mar­kets were geared to rad­i­cal prof­it growth. With­out regard for loss­es. Or rather, col­lat­er­al dam­age to soci­ety as a whole was tol­er­at­ed. The main thing was to fill the bank account.

Today, more and more peo­ple are divest­ing them­selves of shares, bonds or invest­ment funds that are une­co­log­i­cal or eth­i­cal­ly ques­tion­able. A grow­ing sense of respon­si­bil­i­ty is giv­ing rise to a new con­sumer cul­ture. Growth is being rede­fined as a mix­ture of econ­o­my, ecol­o­gy and social com­mit­ment. Inno­v­a­tive approach­es are emerg­ing — so-called impact invest­ings. But what is that actu­al­ly?

Impact invest­ing — what is it?

Investors are no longer only con­cerned with the return on their invest­ment. It is becom­ing increas­ing­ly impor­tant for them to know and under­stand what hap­pens to their mon­ey and what effects their invest­ments may have. A cur­rent exam­ple: Can we rec­on­cile it with our con­science if the envi­ron­ment is harmed for the sake of a good return? Hard­ly!

The idea of impact invest­ing is that investors invest sus­tain­ably and earn mon­ey with it. Finan­cial gain is no longer the only invest­ment goal. The ben­e­fit for soci­ety plays an impor­tant role. In this way, finan­cial resources are specif­i­cal­ly direct­ed to where they are need­ed to make the world a lit­tle more liv­able.

The Glob­al Impact Invest­ing Net­work plat­form tells how this should work:

Impact invest­ing involves col­lect­ing mon­ey from investors — for projects select­ed accord­ing to spe­cif­ic cri­te­ria. The investors not only receive inter­est on the invest­ment and their mon­ey back but also cre­ate an addi­tion­al ben­e­fit — for the cli­mate, for exam­ple. Reg­u­lar reports pro­vide infor­ma­tion on the actu­al mea­sur­able ben­e­fit (a key cri­te­ri­on in impact invest­ing) cre­at­ed by the project.

A good feel­ing cou­pled with real addi­tion­al ben­e­fits is there­fore an impor­tant fac­tor in the attrac­tive­ness of an invest­ment. Investors are more enlight­ened and informed than ever before (long live dig­i­tal­iza­tion!) — and that’s where it gets dif­fi­cult. How do we man­age the flood of data? How do we rec­og­nize mis­in­for­ma­tion? Where does green­wash­ing end and real sus­tain­abil­i­ty begin?

How does this sus­tain­abil­i­ty work?

We need to under­stand what ​“sus­tain­abil­i­ty” actu­al­ly is. Only then can we for­mu­late guide­lines for sus­tain­able action and sus­tain­able invest­ment.

The three pil­lars of sus­tain­abil­i­ty are:

In addi­tion to the con­scious use of the envi­ron­ment and nat­ur­al resources, it is there­fore also impor­tant to focus on peo­ple and to cre­ate social jus­tice. Eco­nom­ic sus­tain­abil­i­ty requires com­pa­nies to behave in a way that does not harm future gen­er­a­tions. So far, so good.

And the ques­tion still remains: What is sus­tain­able and what is not?

This is where pol­i­cy­mak­ers are cur­rent­ly try­ing to cre­ate more selec­tiv­i­ty. The so-called EU tax­on­o­my is sup­posed to pro­vide a uni­form def­i­n­i­tion of ​“sus­tain­able invest­ments.” The result is well known. We do not want to dis­cuss here whether gas and nuclear ener­gy should real­ly be con­sid­ered sus­tain­able under cer­tain con­di­tions. We also leave uncom­ment­ed the aspi­ra­tion of the arms indus­try to be clas­si­fied as sus­tain­able (among oth­er things because of its con­tri­bu­tion to secu­ri­ty and peace). Let’s focus on Wat­ti­fy!

And what does Wat­ti­fy actu­al­ly say about this?

We can­not take the com­plex­i­ty out of glob­al finan­cial mar­kets or world pol­i­tics.

But we can make a (small) con­tri­bu­tion.

We are con­vinced that pri­vate funds must flow into new, sus­tain­able com­pa­nies, projects and ser­vices. This is how projects and inno­va­tions are financed that might not have received fund­ing from large investors.

We are democ­ra­tiz­ing the ener­gy tran­si­tion and meet­ing the chal­lenges of cli­mate change. And the desire in soci­ety to do just that is great.

For us, impact invest­ing means:

We shift the bal­ance of pow­er from a few big play­ers to many who can have a say and earn a share. Through their small and large invest­ments in a crowd invest­ing, we min­i­mize the risk for indi­vid­u­als.

We dis­close every­thing: Investor:s can track what hap­pens with their mon­ey at any time: We make gen­er­at­ed ener­gy, avoid­ed CO2 emis­sions and the cur­rent return direct­ly vis­i­ble. We also achieve this by cut­ting out mid­dle­men. This allows us not only to reduce costs, but also to dis­close fee struc­tures and, in short, to cre­ate trans­paren­cy.

Share, Care & Change

The real­iza­tion that sus­tain­able invest­ments are not at odds with returns and do not have to be accom­pa­nied by high­er fees is the first step toward review­ing one’s own port­fo­lio. But select­ing suit­able invest­ments with a focus on their (sus­tain­able) impact is not easy.

The term ​“impact invest­ing” is not pro­tect­ed and — just like the term sus­tain­abil­i­ty — is used in very dif­fer­ent ways. What is impor­tant here is the high­est pos­si­ble lev­el of trans­paren­cy. The more direct­ly an invest­ment can be made, the bet­ter. For investors: the more pos­si­bil­i­ties there are to take the invest­ment into their own hands and to con­trol the risk diver­si­fi­ca­tion them­selves, the more they should con­sid­er this pos­si­bil­i­ty.

Being able to man­age the respec­tive invest­ments them­selves, while active funds cost fees and ETFs are often not very strict when it comes to sus­tain­abil­i­ty cri­te­ria, puts the crown on impact invest­ment. Those who can direct­ly enter and par­tic­i­pate in sus­tain­able projects, star­tups and inno­va­tors are prepar­ing for the future.