Disclaimer: this article is for general informational purposes only and does not constitute financial or investment advice.
Aligning financial goals with the urgent need for environmental and social progress is more important than ever. HBO’s latest show Industry captures this challenge with characters wrestling with ESG (Environmental, Social, and Governance) and impact investing. While the show depicts a world of cutthroat finance, the real world offers a more hopeful narrative. Decarbonization is essential to combat climate change, and impact investing is emerging as a key tool to make it happen.
Economy Zero Group spoke with Emily Mercy, Co-Founder and Managing Director of Goparity Canada, to explore why impact investing is important for decarbonization. Goparity has created the first platform of its kind in Canada, to empower individual retail investors to invest directly in projects that contribute to reducing carbon footprints. Traditionally, impact investing has only been done by professional investors with large funds and has been largely out of reach of the average person. Naturally, Economy Zero Group was excited to highlight this organization at the frontier of democratizing this industry. Emily’s insights reveal how impact investing bridges the gap between profit and purpose, showing that our financial decisions can and should play a pivotal role in shaping a net-zero future.
The Rise of Impact Investing
Impact investing is gaining momentum globally. The Global Impact Investing Network (GIIN) estimated the global impact investing market at an impressive US$1.16 trillion in 2022. As a reflection of the global momentum around impact investing, the Responsible Investment Association (RIA) saw a modest increase in Canadian asset managers engaged in impact investing in 2023. These capital flows underscore a steadily growing traction of impact investing in Canada as part of a broader movement towards more sustainable and responsible finance.
Impact investments differ from traditional investments in that they are designed to produce measurable social and environmental benefits. Unlike ESG investments, which focus on integrating ESG factors for less risky, greater long-term financial returns, impact investing will often target a specific sector or issue with the intention to generate impact outcomes alongside financial return. When we invest through an impact product, we’re not just hoping for a strong return on our money—we’re actively contributing to solving pressing global challenges, including climate change.
Emily explains that Goparity is about more than “doing well by doing good.” It’s about making investment opportunities accessible to everyone, not just the wealthy. “The traditional financial system often perpetuates inequalities by limiting access to investment opportunities,” she says. “Our mission at Goparity is to democratize impact investing, making it possible for anyone to invest in projects that align with their values, regardless of their financial background.”
Why Decarbonization Needs Impact Investing
Decarbonization is crucial to mitigating climate change, and the stakes are high: the Swiss Re Institute warns that the global economy could lose up to 18% of GDP by 2050 if we fail to take significant action. Meanwhile, the International Renewable Energy Agency (IRENA) estimates that transitioning to renewable energy and sustainable practices could add US$98 trillion to the global economy by 2050.
Achieving these goals requires a massive reallocation of capital toward sustainable projects. This is where impact investing comes in. By directing capital to projects that reduce carbon emissions—such as renewable energy, green infrastructure, and sustainable agriculture—impact investors play a critical role in the global decarbonization effort.
For instance, Goparity supports renewable energy projects like those led by the Barkley Project Group, which implements renewable energy solutions for remote Indigenous communities in Canada. These initiatives not only reduce reliance on fossil fuels but also empower communities by ensuring local ownership of energy systems. This dual benefit—decarbonization and social equity—highlights the power of impact investing as a tool for environmental and social justice.
The economic case for impact investing is becoming increasingly clear. Impact investing is not just about “doing less harm;” it’s about “doing more good.” While traditional ESG investing often focuses on mitigating negative impacts, impact investing actively seeks to create positive outcomes. As Emily puts it, “Impact investing is about making sure that your money is working as hard as it possibly can—not just for your financial future, but for the future of the planet.”
For non-accredited investors—those who don’t meet the financial criteria to invest in certain high-risk opportunities – the traditional investment landscape can be restrictive. In Canada, non-accredited private wealth represents 75% of the country’s total private wealth, yet individuals often struggle to find opportunities to invest in impactful projects. Goparity aims to change that by lowering barriers to entry, with a minimum investment amount of just $10.
This democratization of investment is not only about equity but also about amplifying the impact of capital. The more people who participate in impact investing, the more capital flows into sustainable projects. This, in turn, drives innovation in green technologies and accelerates the transition to a low-carbon economy.
The Power of Collective Action
One of the most exciting aspects of impact investing is its potential to harness the power of collective action. When individuals come together to invest in sustainable projects, they can achieve far more than they could alone. This is particularly important in the context of climate change, where the scale of the challenge is so immense that no single entity—whether government, corporation, or individual—can tackle it alone.
Goparity’s model exemplifies this potential. By pooling small investments from a large number of people, the platform funds significant projects that might otherwise struggle to attract financing. Because investors can see exactly where their money is going, and the metrics for impact in said investment—whether it’s supporting a solar energy project that enhances energy security, or helping a community transition to sustainable agriculture—they can feel confident that their investments are making a real difference.
Transparency is a key component of this approach. Unlike traditional investments, where the impact of your money can be opaque, platforms like Goparity can now provide clear metrics that show the outcomes of each project. For instance, investors can track how much CO2 emissions their investments have helped to avoid or how many kilowatt-hours of clean energy they have generated. This transparency builds trust and encourages further investment, creating a virtuous cycle of impact and return.
Challenges and Opportunities in the Impact Investing Landscape
Like any investment strategy, impact investing faces challenges. One primary obstacle is the regulatory environment. In many countries, including Canada, regulations designed to protect investors from high-risk opportunities can also limit access to impact investments. This is especially true for non-accredited investors, who are often excluded from the most lucrative or impactful opportunities.
However, as demand for sustainable investments grows, there’s an opportunity to advocate for regulatory changes that support broader access to impact investing. “We need to create a regulatory environment that enables more people to participate in the green economy,” says Emily. “This isn’t just about protecting investors; it’s about empowering them to make choices that reflect their values and contribute to the future they want to see.”
Another challenge is the need for standardized reporting frameworks. While platforms like Goparity offer detailed metrics on the impact of their projects, the lack of industry-wide standards can make it difficult for investors to compare opportunities or assess the overall impact of their portfolios. Addressing this challenge will be crucial for building investor confidence and attracting more capital to the sector.
A Call to Action
The journey to a decarbonized and equitable economy is complex, but it’s one we all have a role in. Impact investing offers a powerful tool for individuals to contribute to this transition by aligning their financial decisions with the values of sustainability and justice. Platforms like Goparity are leading the way, providing the tools and opportunities for investors to make a real difference.
Ultimately, the question is not whether we can afford to invest in decarbonization and social equity—it’s whether we can afford not to. As the global economy increasingly recognizes the value of sustainable investments, impact investing will play a critical role in a more resilient planet. Each investment, no matter how small, is a step toward a more sustainable future.
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