The Key Difference between Impact Investing and ESG

 Aaron Marzwell is a real estate executive and developer who founded APPA Real Estate in 2013 and has since served as its CEO. Under his guidance, APPA Real Estate creates workforce housing at affordable rates for individuals in various communities. Throughout his career, Aaron Marzwell has gained experience in several real estate-related fields, including co-living and impact investing.

Impact investing aims to deliver or drive positive change that benefits the community. Impact investors are individuals who are interested in exploring opportunities that can better the lives of people living in surrounding communities and attenuate the negative impact of technology on the environment. These opportunities typically concern education, health, and climate. For example, an impact investing endeavor may include building an investment portfolio that invests in companies that build or use green energy solutions to minimize air pollution and carbon footprint.

While the prime aim of impact investing is to drive positive social change, the commercial solutions generated in that endeavor often result in above-market-rate returns for investors in the long run. Research shows that 88 percent of impact investors have historically reported returns that exceeded their expectations.

Environmental, social, and governance (ESG) shares similarities with impact investing in some areas. However, ESG investing is not the same thing as impact investing in terms of goals. It involves corporate strategies to pursue sustainability by minimizing pollution, enhancing relevancy, and building trust with stakeholders.

ESG investors invest their money in businesses that pivot operations around environmental goals (such as reduction of waste output), social impacts (such as building a healthy workplace culture by promoting diversity), and also cement an effective governance foundation (such as enhancement of business ethics and shareholder transparency). The environmental goals in ESG should not be confused with impact investing since the goal is to show responsibility from which a material financial effect (such as customer retention) may be elicited.

Published: How School Factors in Residential Real Estate Investing

 

I published “How School Factors in Residential Real Estate Investing” on @Medium

Can Impact Investing Surpass Philanthropy in Terms of Merit?

 The co-founder and CEO of APPA Real Estate, Aaron Marzwell, is a distinguished real estate developer in Los Angeles, California, who focuses on providing housing at affordable rates. Aaron Marzwell is also well-versed in various real estate fields, including workforce housing and impact investment.

Impact investing combines the traditional concept of investing with the principles of philanthropy, resulting in a sustainable and profitable investment portfolio that contributes to social and environmental benefits. Impact investment draws on a synergistic effect. Compared to either of the integral parts, impact investing boasts unmatched prospects. The sum of the impact of the integral parts does not fully equate to the synergistic effect of impact investing.

The federal government and other entities endeavor to drive positive impact through pension funds and other strategies. Philanthropic contributions from private entities amass $390 billion, according to Rockpa.org. However, the US capital market encompasses over $60 trillion.

This unpredictable size of the capital market compared to philanthropic donations from entities shows how constrained philanthropy is as an endeavor to drive change. Rather than merely donating to charitable endeavors, entities can push the envelope further by creating impact investing pipelines, which are investment assets that drive positive social and environmental impacts. Assuming one percent of the US capital market is devoted to impact investing, this translates into over $600 billion worth of assets actively committed to driving change, which is significantly higher than philanthropic input.

A Look at Green Real Estate Strategy and APPA Real Estate’s Approach

 An alumnus of Columbia University with a graduate degree in real estate development, Aaron Marzwell serves as the CEO of the Los Angeles, California-based real estate investment and development company APPA Real Estate. Under Aaron Marzwell’s leadership, APPA engages in real estate impact investing through strategies such as green real estate.

Green real estate and other real estate-centric strategies within impact investing focus on generating returns from real estate assets with the potential for substantial social and environmental impacts. In green real estate, investors integrate principles of environmental sustainability into their real estate projects.

At APPA Real Estate, investors achieve this by various means. Such measures include using locally-sourced building materials, forbidding construction teams from using single-use plastics, and improving water and energy efficiency, as well as recycling materials across all project-development phases to reduce waste. The company also provides its construction sites with bottle fillers. This practice encourages plastic reuse among workers while fostering an environmentally-conscious mentality.