What Is Impact Investing?

What Is Impact Investing?

By CIRCA5000 TeamBack to Mission Control

Lucy O'Boyle • Impact investing • 3 min read

Impact investing is about investing in companies that are solving world challenges and innovating, in a measurable way with the aim to make a profit at the same time.

For every company in our funds there is usually an ‘investment case’ (e.g. what is the company’s growth trajectory) alongside an ‘impact case’ (e.g. how is the company actively solving world problems).

We’ve picked out some of the companies that are making an impact. That is, making the world a better place, whilst also trying to create strong returns for their shareholders. Here are some of our favourites!

The pharmaceutical industry in the US doesn't have a great rep… it is often accused of putting profit ahead of accessibility of medicines and therapies.

But, United Therapeutics' pharmaceutical company is different. The pharmaceutical company was founded by the parents of a child with pulmonary arterial hypertension (PAH) — a life-threatening disease that causes the walls of the pulmonary artery to thicken and stiffen, making it difficult for blood to pass through. 

The central mission? To find a cure for PAH. In June 2022, United Therapeutics announced that they had created the world’s “most complex 3D-printed object - a human lung scaffold”. According to 3D systems, the lungs are on track for human trials in the next 5 years.

Alongside its mission to create life-saving therapies, United Therapeutics aims to provide its shareholders with ‘superior’ financial performance.

Finland-based UPM-Kymmene is forging a path in carefully sourced and recyclable products.

So UPM Specialty papers (one of the six parts of their business) have been working towards solving the food waste problem by developing barrier papers for consumer packaging. This material aims to increase the shelf-life of packaged foods to avoid them getting spoilt and thrown away.

Globally, around one-third of all food produced is wasted or lost (FAO) — if you think about the land and labour it takes to grow food, this amount of food waste is a disaster. 

Their Finnish paper mills are set to be powered by one of the largest onshore wind farms in Europe by 2023. A step closer to the company’s aim is to reduce carbon emissions by 65% by 2030. 

Oatly has been hard to miss over the last few years. If you haven’t seen their punchy advertising on the tube, you’ve seen their cartons in your supermarket, or maybe you’re an oat milk convert and drink Oatly in your coffee every morning.

Oatly is committed to shifting the food system towards plant-based options. And in 2021, they increased the volume of Oatly litres produced by 57% internationally.

Already available in 20 countries, the brand has its sights set on world domination in 2023… 

First Solar is advancing the fight against climate change by making every solar module they produce eco-efficient.

Each photovoltaics (PV) product produced by First Solar has one-third of the ecosystem and human health impacts, a 2.5% lower carbon footprint and a 3x lower water footprint compared to average crystalline silicon PV products.

In May 2022, First Solar completed its RBA Validated Assessment Programme audit achieving the highest rating — platinum status. The company is actively moving toward their Net Zero commitment and is dedicated to powering 100% of its global manufacturing operations with renewable energy by 2028. 

Advanced drainage systems (ADS) began its journey after being founded by two engineers who grew up on farms and could see the havoc extreme weather could wreak on crops.

The US has been experiencing an increase in extreme climate events — hurricanes, in particular, have been causing severe flooding and disruption.

So what next? Parts of the US desperately need better water drainage systems to alleviate flood-stricken areas. ADS is highly innovative, expanding from agricultural applications to residential and commercial infrastructure.

In the past, the primary focus of companies considered ‘successful’ was to make big profits for their shareholders. The social and environmental damage they might be causing was often ignored on the path to profit.

At CIRCA5000, we believe that to truly combat climate change and the social challenges that the world now faces, money needs to move in the direction of companies actively doing good.

Remember, when you invest, your capital is at risk. The share price of a single company can move up and down significantly in a short time, so to mitigate this risk, the funds offered by CIRCA5000 are diversified (meaning they hold a large number of individual companies). Before deciding to invest, you should fully understand the investment product, its risks, and its benefits. 

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