International bodies have always said that in order to tackle some of the world’s greatest challenges, private sector funding will have to make up the bulk of investments – enter impact investing.
Impact investing refers to any investment into companies, organisations and funds that generates positive and measurable social or environmental impact and amasses financial returns for the investor. Investments are usually made into sectors that align with the United Nations’ Sustainable Development Goals (SDGs). These include renewable energy, agriculture and affordable and accessible education, housing, and healthcare.
The concept of socially responsible investment is not new. However, within the last decade, impact investing has emerged as an offshoot, aiming to ensure that encouraging positive results is at the core of each investment – even if success is not necessarily guaranteed.
How does impact investing differ from traditional philanthropy?
While both approaches seek to make a tangible difference in the world, there are some glaring differences between the two. Despite both being utilised as a means for good, impact investing is not charity. Furthermore, philanthropy is focused on specific causes, while impact investing has a broader reach and is a crucial driver of positive change.
According to the Global Impact Investing Network (GIIN), four practices are at the core of impact investing: intentionality, evidence and impact data in investment design, managing impact performance and contributing to the growth of the chosen industry. In short, an investor’s decision to make a measurable difference must be backed by hard data. One must observe that investment’s performance and ultimately contribute to sharing knowledge that will allow others to achieve the same positive results.
Currently, one of the biggest challenges facing the globe is the climate crisis. With scientists warning us of the dire consequences that are only a few years away, more investors are beginning to see the benefit of investing for our sustainable future.
How can Citizenship by Investment Make a Difference?
With so many investment approaches, there isn’t a shortage of paths one can take when choosing to make a difference.
Citizenship by investment is one such route that has surged exponentially over the last few years. While a little different to impact investing, citizenship by investment funds are often channelled back into national development projects.
In exchange, investors, who must also pass stringent due diligence checks, gain access to second citizenship – a coveted asset amongst business-minded individuals. Second citizenship provides increased travel freedom to major financial centres across Europe, Asia, and the Middle East. It can also enable holders to seek alternative business and entrepreneurial prospects, and most invaluably, it can in most cases be passed down for generations to come. Over the last year, a growing number of high net-worth individuals have sought out second citizenship as a means of accessing global markets, providing financial and physical safety to their family and as a Plan B for when unpredictability strikes.
The concept of citizenship by investment was first introduced in the Caribbean in 1984 by the dual-island nation of St Kitts and Nevis. Since then, the initiative has spread across the globe, inspiring countries to implement their own versions to attract foreign direct investment.
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The Commonwealth of Dominica
A few short years after St Kitts and Nevis introduced its Citizenship by Investment Programme, Dominica followed suit and has since evolved to meet the changing needs of the market. With over twenty years of experience within the industry, Dominica has been hailed the best route for a second citizenship – as ranked by the Financial Times’ PWM magazine.
Those who choose to invest in Dominica’s citizenship programme do not need to look far to witness the tangible benefits that it has created for the island. Following Hurricane Maria in 2017, Prime Minister Dr the Hon. Roosevelt Skerrit pledged that Dominica would strive to become the world’s first climate-resilient nation. Funds from the Programme have been crucial to making this a reality. They have already contributed to constructing over 1,000 hurricane-resistant and affordable homes, commissioning a geothermal plant, and championing eco-tourism across the island.
Dominica has also committed itself to achieve the UN’s 17 Sustainable Development Goals by 2030, prioritising improving its citizens’ living standards and ensuring that resiliency is at the core of everything it does.
“The word resiliency is thrown around a lot, […] but it does not mean anything. In Dominica, there is actually a structure and a plan behind it. Resiliency has been incorporated into a broader government strategy,” said James Ellsmoor, founder of the Virtual Island Summit – an organisation that connects global islands to share their experiences digitally.
Even though small islands like Dominica are not the main offenders in the climate crisis and other global challenges, the onus has fallen on them to ensure continued survival.
As investors begin to move towards more meaningful investments that align with their ethics and morals, hopefully, the trend will inspire others to do the same, begging the question – how do you want history to remember you?