You might ask, aren’t direct investments just less flexible versions of investments in ESG funds or equities?
Like investments in any asset class, investors commit their money hoping for a financial return. Direct investment products are no different. Direct investment in impact products carries its own risks and advertised returns reflect that risk level. They aren’t for everyone and investors must prove their suitability for these products and show an understanding of the risks involved before they can buy them.
Importantly, each individual direct investment product has its own timeframe and anticipated repayment schedule, either during the investment term or at term end, with some combining income and capital payments through the life of the instrument.
With direct investment you know exactly what impact your contribution made to the project objective and you can track this for the duration of the investment.
Direct investment in impact projects isn't just about returns. Indeed, it is often the case that the primary motivation for any direct investment is not financial at all but it is the outcome that the investment will bring about that drives the decision. The realised impact is the return.
Direct investment is tightly linked to measurable outcomes. This is the impact part of impact investment. Moreover these outcomes are directly attributable to individual investor commitments. As an investor you know the actual impact your investment has made. This could be kilograms of CO2 emissions prevented or kWh hours of clean electricity produced, for example. But crucially, investors can know fairly accurately the true impact of their individual participation in impact projects. In this way, direct investment is much more transparent than investing in funds and listed equities where often goals are broad and impact aims vague and it's unclear the impact, if any, an individuals participation has contributed.
It’s been said that communication of impact is itself impact. Making others aware of the outcome of impact direct investment is important. It shows that organised groups can bring about change for good and lets people know they are empowered, there is hope if we work together.
At ShareIn we also believe that transparency and clear communication with investors is important. It builds trust and credibility. To that end, we’ve always been pushing our platform capability to make it easy for our customers to talk to their investors. We want investors to be proud of the real change they are making and we’re making it easier for users to do that. We will shortly be providing more details about exactly how we are facilitating impact communication from platforms to investors.
If you'd like to find out more about any of ShareIn's direct investment platforms then please get in touch and speak to one of the ShareIn team.