BSB107 Chap.8 Impact Investing, Effective Altruism and Careers
Impact Investing, Effective Altruism and Careers
Money with a purpose
Topic 6 widens personal finance beyond yourself. Investing aims range from financial return only, through responsible, sustainable and impact-driven approaches, to philanthropy.
ESG integration, screening, thematic investing and impact investing each bring values into a portfolio in a different way, and greenwashing is the risk they share.
Giving and working
Effective altruism seeks the most impact per dollar, and its association with the FTX fraud is the case for debate.
Your choice of career, and any professional code it brings, is a third route to impact.
Questions with no easy answer
The topic deliberately raises hard questions: who chooses what is kept in or ruled out, whether ESG issues fit a single rating, how social, environmental, governance and financial aims are traded off, and what happens to issues that cannot be measured.
Expect to argue a position on these rather than recite definitions.
Topic 6 closes Module 1, and its questions about social responsibility reappear at the end of Module 2, applied to corporations rather than individuals.
What this chapter covers
- 01
The spectrum of investing aims
- 02
ESG integration and screening
- 03
Thematic and impact investing
- 04
Greenwashing
- 05
Effective altruism and the FTX case
- 06
Job, career and calling
- 07
Professions and codes of ethics
Worked example · free
Naming the approach behind three funds
- +1Fund X excludes investments by a set criterion: screening.
- +1Fund Y follows a medium to long-term trend chosen top-down: thematic investing.
- +1Fund Z intends a social outcome, measures it and still earns a return: impact investing.
Key terms
- ESG
- Environmental, social and governance factors considered alongside financial ones when assessing an investment.
- Screening
- Setting rules that decide which investments a portfolio may hold and which it must exclude.
- Greenwashing
- Painting a falsely green picture of an organisation to make it look better than it is.
- Effective altruism
- An approach to doing good that systematically seeks the most impact per dollar, whether or not the cause is popular.
- Philanthropy
- Donating money or time to people and causes that need support.
- Thematic investing
- Choosing assets top-down because they are expected to gain from a medium to long-term trend such as climate change.
Impact Investing, Effective Altruism and Careers FAQ
How is impact investing different from socially responsible investing?
Socially responsible investment aims to make a positive social impact. Impact investing goes further: it deliberately targets a social or environmental benefit that can be measured, and still expects a financial return, so measurement is the dividing line.
Why does the unit discuss Sam Bankman-Fried?
He publicly championed effective altruism: he justified pursuing extreme wealth by promising to give it to good causes, while misappropriating FTX clients' funds. The reading asks whether one person's fraud should discredit a whole movement.
What is the difference between a job, a career and a calling?
A job is a means to rewards, usually money. A career is a commitment to advancement, status and wealth. A calling is work valued for its fulfilment and seen as socially valuable and an end in itself.
What is stewardship in investing?
Stewardship means an investor using its votes and influence as an owner to protect and grow long-term value for the people whose money it manages. It describes how an investor behaves as an owner, rather than which investments it chooses to hold.
Are professions better than other occupations?
No. Professions such as medicine, law and accounting rely on advanced knowledge and skills used for a societal benefit and usually follow a code of ethics, but they are not above criticism, as the scandals around firms such as KPMG and PwC show.
Can ESG be captured in a single rating?
That is one of the open questions the topic raises. A single score is easy to compare but may hide trade-offs between environmental, social and governance aims, and it cannot reflect issues that resist measurement, which is partly why greenwashing is a concern.
Exam move
Redraw the spectrum running from financial-only investing to philanthropy and place three invented investors on it with reasons. Learn the short UN PRI definitions verbatim, rehearse a balanced view on effective altruism after FTX, and identify which professional body governs your intended career.
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