Feb 22, 2022

Countdown to trading, part 4 – impact definition on Echo

Here is part 4 of our countdown to trading: how to define impact and how to compare it.


Countdown to trading, part 4 – impact definition on Echo

You want to invest with impact, but what is that? Impact actually is a rather simple thing. It is the positive effect a company has on the world. 

Here is an easy way to think about it. Ask yourself: in what ways would the world be worse if the company were not there? The difference between what the world would look like without this company, and how it actually looks like, is the company’s impact.

If that is what impact is, then one thing seems super clear. The main impact a company has on the world is via its business model. That is to say, what it actually does earn money with.

Business models and signature impacts

Care for some examples?

A food company produces food that feeds people.

A pharmaceutical company produces drugs that cure people.

A car manufacturer produces cars, thus giving people increased mobility.

An insurance company provides financial security to its customers.

This list could go on an on. Every major industry you can think of has its own kind of signature impact on the world.

Thus, when we ask you to compare different companies’ impact in our Onboardings, you mostly have to compare how their business models affect the world. That is a major departure from the risk-based approach of ESG ratings, and a more appropriate definition of impact. The same principle applies when you trade immies on Echo.

No impact?!

Are there also companies with no impact: quite possibly. Companies like these would trade around a price of 0 Ǝ on Echo. A clear sign that, as someone interested in putting your money where the impact is, these are the wrong choices.

Admittedly, comparing business models for their impact is not always easy. But then again: there are no wrong answers. Simply think about the big picture and follow your intuition. For impact is what you say it is.

Curious about Echo Impact Exchange?

Echo is a trading platform for impact rating. That’s right: you can rate companies’ impact by trading their impact certificates. Joining Echo is free for the time being and the profits you make from trading will become convertible to other currencies in 2023!

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