I do want to share a cautionary tale about such investing: in the UK, there are tax-efficient investment vehicles called EISes and VCTs, which are designed to encourage investors to put money into somewhat risky early-stage UK businesses (and give big tax breaks as a result).
At one point, there were renewable energy EIS/VCT funds which seemed to give excellent returns – but only because the companies involved were claiming substantial, risk-free government subsidies for renewables schemes (“feed-in tariffs”). Eventually these schemes were scrapped, as were feed-in tariffs.
So an unwise impact investor might have put money into such a scheme, made a nice profit, and thought they were doing social good. In reality, the profits were just money taken from taxpayers (FITs were funded by making energy more expensive for all households), and impact (building inefficient, small-scale solar in a country where solar energy doesn’t make much sense[1]) probably pretty minimal.
[1] - Peak energy demand in the UK is in the winter when it’s coldest and darkest, so solar is basically useless here. Compare that to California, where peak demand is when people switch on their A/C during the sunniest part of the day.
I do want to share a cautionary tale about such investing: in the UK, there are tax-efficient investment vehicles called EISes and VCTs, which are designed to encourage investors to put money into somewhat risky early-stage UK businesses (and give big tax breaks as a result).
At one point, there were renewable energy EIS/VCT funds which seemed to give excellent returns – but only because the companies involved were claiming substantial, risk-free government subsidies for renewables schemes (“feed-in tariffs”). Eventually these schemes were scrapped, as were feed-in tariffs.
So an unwise impact investor might have put money into such a scheme, made a nice profit, and thought they were doing social good. In reality, the profits were just money taken from taxpayers (FITs were funded by making energy more expensive for all households), and impact (building inefficient, small-scale solar in a country where solar energy doesn’t make much sense[1]) probably pretty minimal.
[1] - Peak energy demand in the UK is in the winter when it’s coldest and darkest, so solar is basically useless here. Compare that to California, where peak demand is when people switch on their A/C during the sunniest part of the day.