Creating socially sustainable asset classes. The advantages of community investing
The integration of ESG criteria in the investment decision and practice is already a well administered business area. Indexes and asset classes are by now defined by market leaders in the field. However, the range of subjects that enter into the criteria and the way these are implemented seem particularly limited. A game of hiding behind indexes as if they were accounting formulas is up to a certain degree understandable to an area where immediate and unrestrained return was the only imaginable strategy.
Crisis and the re-evaluation of Risk are changing the field in many ways as well as regulation attempts that try to define a new accountability of the investment decision. It is thus admitted that the social responsibility of a business activity is not enough when it plays out of the main core and logic of the business practice but that it has to integrate its business strategy. It is not only how to spend your profit that matters but how you make it.
Community investment is entering in that new field with the particularity that investment is entering areas of low return that have mainly two advantages
the first is the fact of being new sectors of investment that equity capital could be directed, the second that socially sustainable communities are long-term investments providing low but sustainable returns.
In times where risk is reconsidered and especially in a time that signals the entrance of big institutional finance players in the equity markets these forms of investment that promise longevity and good conscience can prove to be valuable.
There are today community investment opportunities available to all levels of investors. Depository institutions such as community development banks and credit unions are popular community investment options, but increasingly, there are opportunities to invest in fixed income and private equity products. A new expertise is being created and served by competent agents in the market as is the “Community Capital Management Inc.” that offers specific Asset classes funds.
As USSIF the U.N. institution responsible of the issues of sustainability and responsible investment indicates:
Community investing provides individuals and organizations with tools and skills to improve the quality of life for themselves, their families and their communities. For many, community investing is the pathway to homeownership, job creation and small business development. Millions of lives have been changed in the United States and around the world by this sustainable investment strategy.
A diverse, vibrant and growing marketplace of options exists for community investment, with varying financial returns and an array of community impacts.