Understanding Investor Impact Strategies

A person or entity that puts money into a company with the expectation of a financial return.

The positive effects an investor's actions have on a company.

The total effect an investor's actions have on the world.

The effect an investor has on a company before they invest.

The effect an investor has on a company after they invest.

The positive impact of the company on the world before the investor's actions.

The positive impact of the company on the world after the investor's actions.

A comparison between the company's real-world impact before and after the investor's actions.

A way to change companies' behavior by influencing their share price, usually through selling shares in companies that do not meet certain ethical or sustainability standards.

A group of investors who promote socially responsible investment practices. These investors often focus on environmental, social, and governance (ESG) factors.

The UN Global Compact encourages businesses to adopt ethical and sustainable practices by adhering to ten principles related to human rights, labor, the environment, and anti-corruption.

Instead of completely divesting, this approach involves investing in companies that are considered 'best in class' within their industry, based on their performance on ESG factors.

Investors may disagree about the specific metrics used to measure environmental, social, and governance (ESG) performance, making it challenging to consistently evaluate companies.

Investors influencing the market by allocating funds to companies with positive social and environmental practices and avoiding those with negative ones.

The positive changes in a company's actions, driven by investment decisions.

Companies improve their ESG performance because investors are rewarding good behavior with higher stock prices.

Investors focus on ESG criteria that are relatively easy and cost-effective for companies to meet.

A way to understand the link between investor decisions and their desired impact on the world.

Investors using their capital to encourage companies to adopt more sustainable practices.

Environmental, Social, and Governance factors that companies consider in their operations.

The question investors should ask themselves when considering a particular investment.

The level of evidence supporting a particular investment strategy or theory.

A company's ability to find money for projects it wants to pursue.

A theoretical model used to predict the impact of market signals on company behavior.

When a company's investment decisions are primarily based on its own internal goals.

A key challenge in linking investment decisions to real-world impact.

Large-scale changes to a company's practices.

The importance of considering the potential impact of an investment before making the decision.

A company that prioritizes sustainability and ethical practices, aiming to have a positive impact on the environment and society.

A company with less focus on sustainability and ethical practices, potentially having a negative impact on the environment and society.

A company making advancements in the pharmaceutical sector, developing and producing drugs for serious illnesses like HIV.

The impact of an investor's actions is directly related to the change in company impact. If there is no change in a company's impact, the investor's impact is zero.

A company's positive impact can be measured by quantifiable factors like the number of people positively affected by its products or services.

An investor's impact is assessed by evaluating the change in a company's impact caused by the investor's actions. This requires analyzing the company's activities before and after the investment.

The tendency of companies to prioritize appearing good in ESG rankings, even if they don't make significant changes, to improve their reputation.

Publicly expressing opposition to certain companies or industries, often due to ethical or environmental concerns.

Non-market signals, which are actions that focus on influencing public opinion and policy, aim to create change in companies by shaping public sentiment and driving regulations.

While non-market signals like divestment rely on public pressure and advocacy, they ultimately need concrete action from politicians or governments to create tangible change.

Stanford University’s decision to divest from coal companies in 2014, motivated by student activism and protests, is an example of non-market signals.

While divestment can bring attention to issues, its effectiveness in directly influencing companies through capital markets is limited.

Non-market signals, like divestment, rely on indirect influence and are difficult to quantify due to their complex nature.