Back in the 1990s, investors only had a handful of impact funds to choose from. Today, investors can pick from thousands of mutual funds and exchange-traded funds (ETFs).¹

Among the many choices today, you could consider, for example, CRBN, a low-carbon exchange-traded fund, or SHE, a gender diversity fund.*

In the world of impact investing, more than 1,720 organizations manage $715 billion in assets.² Asset managers are set to launch more than 200 new ESG funds in the United States between 2020 and 2023, which would more than double the activity of the previous three years, so there will soon be even more choices.³

Make money and support positive change in the world? I understand why some people might think it’s not possible to do both. But the data shows that impact returns are comparable to traditional investments: One analysis found that 80 percent of reviewed studies showed that sustainable practices have a positive influence on investment performance.^4,5 And investors themselves say they are happy with the returns they get. One survey found 68 percent of impact investors reported that their investments met their financial expectations in 2019, while 20 percent said they outperformed.²

So it turns out the potential is there, after all, to do good and achieve growth in your portfolio.

When I started out in the wealth management business, impact investing looked very different from what we see today. Ultra-high-net-worth philanthropists and families with their own foundations dominated the conversation. As more investors seek to make a commitment to positive change, impact investing is being democratized.

There are many more ways to invest with purpose now. The minimum amounts needed to invest have come down to as low as $500 for mutual funds, and can sometimes just a single share for ETFs because they’re traded like stocks.⁶ ESG investing has never been more accessible.

Some people have a tendency to think their money only has impact when it provides direct, tangible assistance, such as in the aftermath of a natural disaster. Over the past decade, many have discovered that impact investments can help them not only make a difference to the issues closest to their hearts but achieve returns as well.

While one-time donations for disaster relief are critical for immediate aid in a crisis, this is not really what impact investing is about. Purposeful, values-based investing allows you to address systemic problems in our society over the long term. But there can be room for both in a well-designed strategy.

As impact investing has grown in popularity, “greenwashing” has emerged as a real risk as more companies make questionable claims hoping to capitalize on sustainability momentum.

The good news is that there are now several ways to vet impact and ESG investments. Many now use the criteria found in the Impact Reporting and Investment Standards (IRIS), which is a catalog of performance metrics developed by the Global Impact Investing Network. Some investment managers have also developed proprietary impact measuring systems to add an additional layer of due diligence to the research process. When you’re looking to get into this space, be sure to ask your investment manager how they evaluate potential investments from an ESG perspective.