Unlike SRI and ESG investing, impact investing is an investing strategy that seeks to achieve social or environmental goals, as well as generate profit.
Assessing ESG factors in investment decisions allows you to see just one side of the story; Impact investing adds another layer to that story. An investor first evaluates the ESG risks of a potential company, and then puts an emphasis on identifying if the business model has integrated intentional positive impact on stakeholders as part of its activities. One way we measure this is by seeing how the company aims to address the United Nations(SDGs).
Key Factors That Set Impact Investing Apart From Other Sustainable Investment Strategies:
Intentionality of social and environmental impact
Investor’s contribution to the impact
Strategy to reach the desired impact
Measurement of the impact