Bay Area’s impact investing sheds light on larger industry

Steve Prostano
Posted by Steve Prostano
Family Wealth Advisors

Investing in an organization or fund with the aim of generating social or environmental impact alongside a financial return – it’s a concept that has been gaining wider appeal and attention in wealth management.

View along the shore at waterline, with Golden Gate Bridge in the distance.Often known as impact investing, the concept has actually become an industry. In fact, the Global Impact Investing Network (GIIN) estimates impact investments totaled $60 billion in invested capital in 2015.

Family Wealth Advisors, part of Bank of the West’s Wealth Management Group, recently partnered with the Bay Area Council Economic Institute (BACEI) to look more in-depth at impact investing activity in the San Francisco Bay Area, and I think insights from the report have broader relevance worth highlighting.

In general, the targets for much of impact investing fall into three general groupings, according to the report:

1. Creating social value through new products or services. This may be the most common, as investors focus on an objective such as sustainable agriculture and food systems, access to low-cost health services or safe drinking water, or clean energy. Living Goods, founded by Chuck Slaughter to bring simple health treatments to the people of Africa, would be a fine example of this activity. (Learn more in this video.)
2. Generating new employment opportunities for disadvantaged populations. Some microfinance projects are a good example of this.
3. Investing in specific geographies. Many investors may look to grow firms in economically disadvantaged countries, or invest in real assets, such as housing.

These three areas give a good framework for understanding the types of investments that make up this industry – not only in the Bay Area but across the United States. I encourage you to read the full report here.

As the BACEI paper notes, impact investing is a kind of “investment vehicle in evolution.” As it continues to take shape, I am eager to explore it further on this blog as a possible choice for many ultra high net worth individuals.

For further reading, I recommend my colleague Julie Shafer’s blog post on 5 steps to becoming a more strategic philanthropist as another great resource for those who may consider similar targets for their philanthropic giving.

 

Bank of the West, its affiliates and subsidiaries, are separate from and unaffiliated with the Bay Area Council Economic Institute.

Reminder: All comments are moderated prior to publication and must follow our Community Guidelines.

Submit an Idea

[contact-form-7 id="32" title="Share An Idea"]

You are leaving the Bank of the West Blog. Please be aware: The website you are about to enter is not operated by Bank of the West. Bank of the West does not endorse the content of this website and makes no warranty as to the accuracy of content or functionality of this website. The privacy and security policies of the site may differ from those practiced by Bank of the West. To proceed to this website, click OK, or hit Cancel to remain on the Bank of the West Blog.