Investment Intel by Jakub Krivan #6: TRIPLE BOTTOM LINE INVESTING

An old saying reminds us that when the last tree is cut down, we'll realize we can't eat money. And I think we've never been closer to this actually happening. Don't get me wrong – I am, first and foremost, an investor. I do it for profit. But there's a catch: if profit becomes the only reason and criteria for conducting business, things can go south pretty quickly for the environment as well as the society. In fact, they are going south right now. And the triple bottom line framework can help us change it.

What is triple bottom line? In business, the bottom line traditionally means how well a product or company performs financially. The true cost of doing business, however, transcends the financial realm.

That's where the triple bottom line framework comes in. It's a concept that motivates entrepreneurs to consider not only the financial impact of their business, but the environmental and social aspects as well. In other words, the triple bottom line places equal emphasis on the planet and people as it does on profit.

Why should it concern me as an investor? This one's easy: because what you invest in impacts the society and the Earth as well as your bank account. And with investments, it's a good idea to know what’s going on, isn't it?

As far as I'm concerned, being aware of what exactly happens with the planet and the society when I invest is as important as knowing what exactly happens with my account balance. In other words, I don't think we're talking about three different concepts, but rather about a three-fold influence of every financial transaction.

How can I make triple bottom line investments? One of the ways pursue the three bottom lines of business is investing responsibly. In practice, this means putting your money in meaningful, sustainable investment schemes and products. This is called social impact investing and it’s based on the idea that investments can yield returns on two fronts. In microfinance, for example, the investor makes profit on providing small entrepreneurs with basic financial services, helping them improve their living conditions.

That's basically it. It's not rocket science – it’s just about giving your next investment choice a second thought and asking yourself whether you're considering profit only, or whether you're incorporating people and the Earth into the equation as well. The choice is yours to make.

The Takeaway Responsible investors should follow the triple bottom line framework and focus their attention on social and environmental aspects of business as well as on the financial aspect.

I don’t think we have a choice, really. If we want to change the course of what’s happening around us for the better, we have to start thinking about more than just profit. Unless we want to try eating money, that is.

Every investment bears a risk. The basis for investments is the presently valid prospectus, the current versions of the key investor document (“KID” or “KIID”) as well as the annual report (and/or the semi-annual report), which are available free of charge at the respective management company. No assurance can be given that the investment objectives are achieved.