Impact investing with a triple impact

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EthicHub is a social company focused on serving unbanked small farmers, offering new financing tools at cheaper and more accessible rates

and the possibility of marketing their crops in international markets, generating social, economic, and environmental impact.

What is impact investing?

The term  "impact investing" is growing at an extraordinary rate. And it makes all the sense in the world because it gives the investor the possibility of being fully aware and responsible for the ultimate destination of their money. The world of impact investing offers investments in projects with a notable return and moderate risk to which we are accustomed. The fundamental difference lies in the fact that registered investments contribute to solving a problem at a global level.

And this growing trend may well be consolidated in a new wave of innovation because it makes a real impact in the world.  Between two investment possibilities, with the same return and a similar risk, it is difficult to believe that most people do not opt for the one that also contributes to solving an economic, social, or environmental problem.

The positive impact generated by a single investment

Sometimes we are not aware of the immense power we have as investors. Regardless of our economic capacity, our actions can contribute to changing the world. Small contributions from many investors are as valid as an enormous contribution from a single investor. That is the power of decentralization. The choices we make every day to consume a specific product can contribute to a better world. For example, enjoying excellent specialty coffee on a London terrace, served by Change Please, roasted by Old Spike, and grown by EthicHub's small producers has an immense tangible impact. With that simple choice, you are helping to improve the quality of life of the homeless people who serve these two British social enterprises and also the farmers of EthicHub. And all this, just by enjoying an excellent cup of coffee!

Benefits and challenges in impact investing

The benefits of impact investing are very tangible, but there is still a lot to do. Quantifying these benefits and the impact generated is one of the most important challenges. In fact, quantifying this impact neatly and professionally is one of the world's most important demands for impact investment. For investors, it has to become a report that accurately reflects the improvements generated by their money. For projects and social companies in impact investing, it has to be a perfect metric to know where the impact has been impacted and where the impact can be improved.

Impact Investing and sustainability

The world of impact investing has to go hand in hand with sustainability. It is possible that what is not sustainable or profitable will no longer make sense in the near future. Today we have at our disposal new technological tools that allow us to create new business models, much more collaborative, or rethink and improve existing ones. Blockchain technology and cryptocurrencies allow us to reach more people who, until now, have been neglected because they did not have access, for example, to the traditional financial or banking system. These might be hard-working people with profitable activities, incapable of breaking the cycle of poverty that grips them. And that is precisely what Bitcoin has taught us, the limitations can be broken and that there is a new transparent, cheap, and instant way to reach these excluded people. And not only that, other characteristics associated with technology are transparency, gratuity, dispensing with trusted entities ... And anyone is likely to join this new revolution.

Can the Philanthropy Help Advance Impact Investing?

Philanthropy is fine, but it may not last long. We can help other people selflessly until we can no longer do it. Then what? On the other hand, the world of impact investing offers us the possibility of rewarding investors with notable returns even if they do not have a declared intention of helping third parties. And it doesn't matter, what is your genuine interest behind your investments.  It is also legitimate to look for new investment opportunities that you cannot find in current banking products. And granting that return on investment is how we have to mobilize large investments, public or private, to allocate them and generate that immense global impact. The secret is to create collaborative ecosystems, where we all win with the relationship, regardless of having a selfish attitude. The result of our actions will redound to benefits for the entire ecosystem.

Importing impact investing in Latin America

The world of impact investing is not limited to a specific geographic area. Investors and beneficiaries can be located anywhere in the world. We may think of developing countries as the most realistic option, and there are indeed enormous opportunities in these regions. It is an immense blue ocean that until now remained unexplored for different reasons. 

Latin America, Africa, Asia ... or any other place that today may seem inaccessible to us. That's where a problem remains to be solved, and the world of impact investing will have an opportunity to be present.

Are there any risks in impact investing?

As with any other investment, there is always a risk, and the world of impact investing is no exception. Multiple causes can trigger specific actions that lead to our investment being unprofitable. Therefore, it should always be an obligation of the investor to carry out a prior feasibility study. To the classic risk-reward investment equation, the world of impact investing incorporates a new element; the impact. We can assume greater risk and give up a greater profit if, in return, we put into the equation the impact generated with our investment. That intimate satisfaction is not quantifiable, but it sure makes us feel better.

Ethichub microfinance innovation

EthicHub arises with a global vocation to address unbanked small farmers, hard-working people with profitable activities, unable to develop socially and economically just because they are excluded from the traditional financial system.

Now, thanks to the investors on our platform, they have cheaper and more accessible financing tools. Before, they paid interest above 100% per annum; now, they have interest rates below 15%. This is how the figure of savings can arise in these communities and achieve their personal development. But not only that, with the commercialization of their crops in international markets, we managed to protect and value what has always been the lowest link in the distribution chain, being the most important.

And the impact generated, although not very tangible, also reaches nature and respect for the environment. Suppose we do not protect the way of life of these people, their small crops integrated into nature, their excellent coffee produced under the shade of the trees. In that case, we will expose them to the situation of opting for monocultures in flat extensions. Also, an alternative where ancient trees, the fauna, and flora that surround them do not have much future. Think about that too when enjoying that coffee in London!  

 

 

 

 

Topics: coffee, invest

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