Microfinance: the future?
The article Impact Investing: Happy returns discusses the emerging concept of “impact investing”- an alternative to traditional capitalist investing with a social twist. The goal of impact investing is “to improve the world as well as make money”1, said Jed Emerson, co-author of a book about impact investing.
The article highlights Leapfrog Investments, a “microinsurance fund” that invests in companies who provide insurance to developing nations. Leapfrog Investments’ first deal was investing $6.7m in AllLife, a South African company providing life insurance to HIV/AIDS victims.
This shift in corporate investments reflects the recent emergence of corporate social responsibility sectors. I support this aspect of business because I find it noble and beneficial to society for companies to venture into impact investing. Since impact investing is a fairly new concept, the risks are high (such as very low profit and disagreements between investors as to which firms are exactly considered socially responsible); however, Ron Cordes, a finance guru, explains that “microfinance debt was the top-performing piece of [his] portfolio” when the finance market crashed in 2008. I believe corporate social responsibility is an increasingly important part of the business world, and that impact investing will prove to become a large, important sector in the future.
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References
1. “Impact Investing: Happy Returns | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. The Economist Newspaper LImited, 10 Sept. 2011. Web. 15 Sept. 2011. <http://www.economist.com/node/21528678>.