What Is Impact Investing?

Impact investing is making investments to help create beneficial social or environmental effects while also generating financial gains. This investmentsteaegy can involve different types of asset classes, such as stocks, bonds, mutual funds, or microloans. The point of impact investing is to use money and investment capital for positive social results.

 

 

 

 

 

 

 

 

 

 

 

 

Environmental, Social, and Governance (ESG)

Environmental, social, and governance (ESG) refers to the practices of the company being invested in. ESG investors look for companies that have ethical governance, prioritize the well-being of workers in their supply chain, or work towards positive environmental outcomes and sustainable business practices. The integration of ESG factors is used to enhance traditional financial analysis by identifying potential risks and opportunities beyond technical valuations. While there is an overlay of social consciousness, the main objective of ESG valuation remains financial performance.

 

Socially Responsible Investing (SRI)

Socially responsible investing (SRI) goes a step further than ESG by actively eliminating or selecting investments according to specific ethical guidelines. For example, SRI investors may avoid investing in companies that are involved in producing or selling alcohol, tobacco, or firearms. The underlying motive could be religion, personal values, or political beliefs. Unlike ESG analysis which shapes valuations, SRI uses ESG factors to apply negative or positive screens on the investment universe. SRI is often considered a type of impact investing. However, SRI may focus more on avoidance of harm, while impact investing also suggests a positive impact via its investments.

 

 

 

 

 

 

 

 

 

 

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Reference: https://www.investopedia.com/terms/i/impact-investing.asp

 

 

 

 

 

 

 

 

 

 

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What is ESG & SRI Investing?: Using Your Money for Good

 

 

 

 

 

 

Types of Impact Investments

Impact investments come in many different forms of capital and investment vehicles. Like any other type of investment class, impact investments provide investors with a range of possibilities when it comes to returns. But the most important thing is that these investments offer both a financial return and are in line with the investor's conscience.