Pioneering organisations are now able to access capital to enable them to do amazing things, which is extremely empowering.
However, as the sector continues to grow and flourish it is only right to ensure the impact is truly positive.
Defining positive impact
With its fast pace and adoption of the terms there is a risk that without common taxonomy and standards there could be a variety of claims as to what positive impact actually is.
Therefore, there are distinct calls to action for both investors and direct impact investment providers to bolster the sector.
For investors to help judge whether an investment is delivering a positive impact that they are happy to support and whether it is within their risk appetite they should look under the bonnet of an opportunity.
Do they trust the investment provider? Is the information easy to access and clear? Do they understand the business and the investment risks involved, as well as what impact they expect to see? Does this investment meet their return and impact requirements?
Becoming mainstream
With more direct ethical investment opportunities out there and with a continuing drive from more investors (and potential investors) to want to use their money positively, direct investing will undoubtedly become more mainstream.
A development economics estimate evaluated the expected contribution to ethical investing by age group and has estimated that 18-34-year-olds will increase their contribution nine fold from 2019 to 2027 to more than £900m. It is an exciting and positive time for everyone involved.
It is clearly the time to have industry-wide definitions on what positive impact looks like and to make navigating the options for investments more straightforward for an average investor.
Finally, while those of us working in the industry will always want direct ethical investments to be predominately known for the impact they deliver, it is also very important to keep letting people know that they continue to match-up alongside mainstream commercial investing as good investments in their own right.
Dan Hird is head of corporate finance at Triodos Bank
