Sharp Daily
No Result
View All Result
Thursday, October 30, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

The downside of Impact Investing

Malcom Rutere by Malcom Rutere
May 2, 2025
in News, Opinion
Reading Time: 2 mins read

Impact investing is investing with the intention of generating measurable social and environmental impact along with financial return. It stretches across ESG-compliant assets to direct investments in marginalized communities. Over the years, impact investing has become popular among investors. They are drawn towards assets that will achieve a dual purpose, that is, desirable financial returns and positive social and environmental results. Investors also desire to be seen as one of the “good guys” so they draw their focus towards impact investing. As desirable as it may seem, concerns arise that impact investing may be compromising traditional performance metrics and investors are substituting profit for purpose.

Proponents of impact investing debate that companies that practice impact investing tend to perform better than traditional companies due to low risk exposure, better governance and alignment with future-facing industries. However, skeptics are critical toward this trend because the metrics used are often subjective and lack standardization. For instance, a company may be included in one ESG index but is excluded in another because the rating methodologies often rely on inconsistent criteria that make it difficult for investors to compare ESG ratings across providers. Reduced diversification because they focus more on certain sectors such as renewable energy. High fees due to specialized screening processes such as extensive data analysis, third-party verification and constant updates to keep portfolios aligned with evolving ethical standards. In some cases, capital is directed toward ventures with strong ideals but weak fundamentals such as unproven business models and poor cash flow. Such limitations undermine trust and raise concerns about whether impact investing is being over-exploited. Younger investors are also embracing impact investing strategies, foregoing high potential returns for value alignment.

Some investors have managed to integrate impact investing with traditional investing by making sound decisions based on ability for measurable impact and strong earnings. However, it requires rigorous due diligence to ensure that the business is as strong as the social objective. Clear, verifiable impact metrics aligned with global standards such as Impact Reporting and Investment Standards (IRIS) and Global Impact Investing Rating System (GIIRS) and a long-term investment target with a thirst for volatility and innovation in sectors such as renewable energy and affordable healthcare. Engaging in shareholder activism by compelling traditional firms to embrace sustainable practices which will create impact within high-performing companies.

Impact investing has enlightened the investor’s role in conserving the society. However, investors must question whether their capital is creating change or are they victims to a well-marketed scheme. Integrating impact investing with traditional investing requires essential elements such as discernment, transparency and willingness to question virtuous claims. In today’s market, impact and performance are very important and essential.

RELATEDPOSTS

No Content Available
Previous Post

ESG investing: What it is and why it matters

Next Post

Safaricom to deactivate unverified M-Pesa pay bills

Malcom Rutere

Malcom Rutere

Related Posts

Analysis

How Kenya’s bond market boom could benefit everyday investors

October 29, 2025
Business

Kenya Inflation 2025: What Steady Prices Mean for Your Savings and Best Investment Options

October 29, 2025
News

Who Should Invest in a Money Market Fund

October 29, 2025
Analysis

From paycheck to progress: how I learned to make every salary count.

October 29, 2025
News

Eastern Africa’s unified spectrum strategy to boost broadband

October 27, 2025
Education

Compliance training is emerging as the cheapest form of risk control

October 22, 2025

LATEST STORIES

How Kenya’s bond market boom could benefit everyday investors

October 29, 2025

Kenya Inflation 2025: What Steady Prices Mean for Your Savings and Best Investment Options

October 29, 2025

CIC insurance and Equity bank fined KES 1.2 bn for holding unclaimed assets in Kenya

October 29, 2025

Building trust and convenience in modern finance

October 29, 2025

Global or local? Why Kenyan professionals should consider domestic investments

October 29, 2025

Who Should Invest in a Money Market Fund

October 29, 2025

EABL to redeem KES 11.0 bn bond early to cut financing costs

October 28, 2025

Money Market Funds Explained: A Beginner’s Guide (Kenya Edition)

October 29, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024