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IMPACT INVESTING • ESG • SOCIALLY RESPONSIBLE INVESTING
To keep things straight, at Citizen Mint we distinguish between the three main types of “sustainability” investing as follows:
Socially Responsible Investing (SRI):
This is perhaps the easiest and most subjective approach. Simply put, you avoid investments you think will cause damage to society or the environment. Exclusion of cigarette and alcohol producers, nuclear power operators, weapons manufacturing, fossil-fuel producers and distributors is quite common. However, for SRI to have impact, the majority of investors must agree which companies to avoid and that has not yet happened. When you sell the shares of a polluting utility, for example, someone else is likely to step in and buy it.
Widely accepted guidelines and criteria on environmental, social and corporate governance best practices are used to analyze investments, usually in the public markets, in addition to traditional performance measures. The goal: to invest in companies striving to do what’s best for all their stakeholders — employees, customers, local communities and owners/shareholders, while also limiting negative impact on society and the environment. Few companies score highly on all three factors — the E, S and the G. But the effort of rating helps to hold companies accountable, so ESG investing has and will continue to be a major force toward positive change. However, ESG is more about how companies behave than the output of beneficial goods or services.
Here, the focus is on specific investment opportunities, often in the private markets, that aim to a solve an environmental or social challenge, materially, measurably and intentionally while also providing a profit. Impact investments tend to be more targeted and seek to address very specific needs or challenges. That said, we recognize that many of these needs and challenges are interrelated.
Each impact investment we research and put on the Citizen Mint platform is evaluated using key performance indicators (KPIs) to track the project and its progress toward stated goals. Examples of project-based metrics include:
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