It’s becoming increasingly important for investors of all levels to make socially conscious investments ensuring that their investments align with their values. Broadly referred to as impact investing, this type of investing means supporting organizations, businesses and projects that will have a positive social or environmental impact.
While impact investing has historically been associated with high net-worth individuals, in recent years it’s gained increased popularity with middle-class investors who, though having more limited resources or capital, nevertheless wish to have their investments return more than just mere financial dividends. But, understandably, some people may find themselves torn between investing in something that will have a positive impact and investing solely based on return.
The encouraging reality is that investors don’t have to make that choice – you can make impact investments and still see market or above-market returns, and there are an increasing number of examples of ways to do this. Janine Firpo is an interesting case study of an investor that’s gone all-in on impact investing and is consistently realizing strong returns on those investments.
A case study
Janine had been working in the computer and multimedia industry since the 80s, and in 1995 she took a year off to travel. During that year, she backpacked through sub-Saharan Africa and was powerfully moved by the poverty that she saw in the region. Returning from that year abroad she had become determined to find ways to use her technology and business knowledge to help reduce poverty.
As a result, she spent more than two decades traveling the globe, helping to bring technologies and development projects to Africa, Southeast Asia and other regions with high rates of poverty in her role with several philanthropies. After this period of nearly constant travel, she retired from that career and returned to the Bay Area, where she became familiar with the broader ideas of social philanthropy and impact investing. She began to realize that she had committed herself to leading a life of value but hadn’t carried that same philosophy over to her investments.
A vision for investing
Janine felt that her investments were, in a way, working against efforts in her own life and work. With this realization, she made the decision to invest everything she had in a way that supported her values, and that might help to build the world she wanted. She shared this vision with her financial advisors but found that they were not able to fully meet her goals. So, she took back control of the assets and began to invest them herself.
Janine has since spent extensive amounts of time researching investment opportunities and finding investments that align with her thinking, and not surprisingly she has found that it can be a time-consuming and remarkably difficult project to start from scratch. In order to help make impact investing easier for others, she is currently writing a book that condenses and shares the results of her efforts, while providing step-by-step guidance for value-aligned investing.
Returns for impacting investing
When asked whether she is getting acceptable returns from these new investments, Janine responded with an emphatic, “Yes!”, noting that “this is not about giving up returns. This has never been about giving up returns.” As an example, she shared her experience with a particular holding in her portfolio. She used the website AsYouSow.org to learn more about how this holding aligned with the values she prioritized and found out that it had a rating of D (not good). She then found another holding with A and B ratings on those values and invested in that instead and found that over a 10-15-year time frame, the alternative investment actually had yielded higher returns. Clearly, a win-win for Janine, and would also be for many middle-class investors looking to protect and grow their savings and retirement funds.
To learn more about Janine Firpo’s efforts to make impact investing more accessible, listen to her full podcast interview. Or check out some real estate impact investment opportunities available at Small Change.