Given the fast pace at which the financial world is changing, impact investing has grabbed the limelight and emerged as a potent route through which investors can make money while making a difference. Our work at BMS Auditing is dedicated to offering our clients professional guidance through this vibrant frontier in sustainable finance.
Understanding Impact Investing
The Global Impact Investing Network states that "impact investments are investments made to generate measurable social or environmental impact alongside a financial return". Okay, but what does this look like in real life?
Impact means a positive, intentional result of an activity that addresses the problem at hand, such as one expects an "impactful" investment to help school dropouts return to education or employment, or the unemployed join the workforce.
Probably the best example of impact investing is microfinance. Microfinance, popularized by Nobel
Peace Prize winner Mohamed Younus is designed to bring people out of extreme poverty by giving them access to small loans. Most of these so-called micro-loans, in many cases given to women, carry a breathtakingly high rate of repayment, of around 97%, in developing countries. The small sums make it possible to develop small-scale agricultural, craft, or commercial activities that bring the borrower out of extreme poverty.
The Three Pillars of Impact Investing
Impact investments are defined by three criteria, namely;
- Intentionality: Investors identify a specific cause that they would like to make a change for. These could include professional integration or fighting poverty.
- Additionality: The investment should contribute to securing the intended impact—an event that might not otherwise take place.
- Impact Measurement: This is the quantification of what the actual results of investment are, instead of just measuring the activities or the output.
BMS can support investors on these three elements through comprehensive tools and expertise available on its platform. It helps investors clearly define their impact goals, spot opportunities where their capital is genuinely needed to drive change and establish robust measurement frameworks that allow for tracking and reporting on actual outcomes in the real world. This allows investors to be better informed and maximize their positive impact.
Benefits of Impact Investment
- Lowers Risk for Investors: Impact investing involves the diversification of one's portfolio toward investments that yield positive social or environmental impact and reduced long-term risk while searching for acceptable returns.
- Maximizes Social and Environmental Returns: Clean energy, regenerative agriculture, and social enterprise generate financial returns that have a positive impact on society and the environment.
- It generates great benefits: Impact investing is taking action against some of the most pressing problems in the world today, such as climate change, poverty, and inequality, and course-setting for a more sustainable and fairer world.
- Funding Sustainable Business: Impact investing provides finance to green and social enterprises and reinforces good practices so that they can scale in operations that are environmentally and socially responsible.
- Reduces poverty and inequality: Impact investments can generate jobs and improve income distribution, which in turn reduces poverty and increases social equity.
- Creates Jobs and Economic Growth: Investment in social enterprises and green technologies that have job creation potential, hence leading to economic activity.
- It enhances access to education and health care: Impact investing helps in supporting programs expanding educational opportunities and health care service delivery to serve those who have poor access.
- Preserves Natural Resources: This kind of investment will ensure that natural resources are conserved and natural degradation is prevented through proper practices.
- Enhances Public Finance and Governance: Impact investing can bring about efficiency in public spending, making governance effective and more transparent.
- Tackles Climate Change: Impact investing is helping the global effort to mitigate climate change through financing projects that reduce greenhouse gases.
- Fosters Sustainable Practice: Investing in socially responsible and environmentally friendly businesses spurs other players to embrace sustainable practices.
- Higher Public Engagement: Impact investing induces a better level of societal engagement and accountability by its call to business sectors for accountability concerning broader social and environmental impacts.
- Reduces Corruption: Impact investing may help alleviate corruption, increase public trust in institutions, and promote transparency and accountability.
Best financial and accounting services by BMS Auditing
- Market Insight: We help the investor analyze the current market trend for making an informed decision in the setup of any new venture.
- Compliance Management: We ensure that the company is updated with proper compliance, such as tax compliance, ESR, UBO, and all.
- Tech and Online Presence: We give insights into the technology upgrade that helps any new company establish a strong online presence through a website, mobile applications, and social media.
- Feasibility Studies: We undertake comprehensive feasibility studies to determine the viability of new investments.
- Valuation and Due Diligence: We provide company valuations and extensive due diligence services to investors who intend to make new acquisitions.
- Ongoing Accounting and Financial Services: We provide periodic accounting services and financial management services for continuing to operate companies efficiently in their business environment.
How does BMS Auditing Assist?
In BMS Auditing, we aim to assist our clients in understanding the detailed workings of impact investing. We understand that every investor has some goals—financial, as well as societal. Our experienced team is ready to help you explore how impact investing can fit into your overall financial strategy.
We encourage you to discuss your investment objectives and impact goals with your BMS Auditing Dubai. Together, we can find opportunities that best reflect your values and financial goals toward a more sustainable future while working toward your financial objectives.
As that field of impact investing continues to evolve further, BMS Auditing will continue to lead and bring our clients the most recent trends and opportunities. We are here to help in treading this exciting new frontier in finance, gliding through the inherent balance between financial returns and the quest for shaping a positive impact on this world.
Follow BMS Auditing for more interesting insights into sustainable finance and impact investing. We will guide you through responsible and impactful financial decisions in this evolving world—choices that benefit both your portfolio and society at large.
